Influence of Leadership Style on an Organization's Ethical Behaviour - Literature review Example

Influence of Leadership Style on an Organization’s Ethical Behaviour Introduction Leadership refers to the behaviour of an individual guiding a group of people to attain a common target. It is “an art of persuading a follower to want to do the things, activities that the leader has set as goals” (Mihelic 2010, p. 32). Traditionally, leadership theories emphasized on rationalizing. However, the focus of transformational and charismatic leadership has its emphasis on values and emotions (Rukwami et al, 2010). Ethics involves right and wrong; what we ought to do and what we ought not to do in our human relations. It describes and prescribes moral requirements and behaviours. This means that, it outlines the acceptable and unacceptable ways. In the context of an organization, ethics is a candid communication about the values and principles that are of importance to stakeholders and to the business (Mihelic, 2010). Ethical leadership means a leader exhibiting appropriate conduct through personal action, the way he relates interpersonally with his followers, and promoting such conduct through communication, decision making and reinforcing. Leadership carries within it power and influence; it also carries obligations, responsibility and vision. Ciula (2003) observes that leadership involves human relationship. She says that “some of the central issues in ethics are also the central issues in leadership. They include personal challenges of authenticity, self-interest and self-discipline. They also include moral obligations related to justice, duty, competence and the greatest good” (p. 302). Theory and research have shown that the style of leadership influence the ethical behaviour of the members of an organization. This paper looks at two leadership styles, transactional and transformational leadership, to argue that the leadership style practiced in an organization has a significant influence on the ethical behaviour of its members. Styles of leadership The concepts of transformational and transactional leadership styles were introduced by Burns (1978). The way to differentiate the two kinds of leadership is in what leaders and followers offer each other (Raja & Palanichamy, n.d). Transactional leadership influences individuals through conditional rewards. The leader articulates his expectations from the members and how they will be rewarded for their commitments and efforts. Its focus is in exchange of resources. In this kind of leadership, the leader gives his followers something they want in order to get what he wants. Followers in this kind of leadership meet expectations motivated by the reward they receive. Transformational leadership on the other hand transcends the members’ self- interest to meet the larger organizational goal (Raja & Palanichamy, n.d). Transformational leaders focus on higher order intrinsic needs and therefore offer a purpose that supersedes short-term goals (The Tranformation Leadership report, 2007). Transactional leadership is a style of leadership whereby the leader is viewed as a change agent and makes exchanges with the members of the organizations leading to productivity improvement. On the other hand, transformational leadership is a style that involves the leader empowering the members of the organization to achieve a certain goal that the organization has set plus other achievements like professional growth, personal growth and employee morale. This discussion employs three arguments to contend with the fact that the leadership style in an organization influence the ethical behaviour of its members. They include Maslow’s theory of human needs, the social learning/modelling theory and the social exchange theory. Maslow’s theory of human needs Burns influence, when he talks about transforming leadership, came from the Maslow’s theory of human needs which identifies that people have needs. The theory proposes that the extent to which members of an organization perform effectively is directly proportional to the extent that these needs are met. Transactional leadership promises rewards after certain ways of behaviour. Obiwuru et al, (2011) agrees that human beings’ membership in an organization is driven by a desire to achieve certain objectives. Therefore, the leadership style an organization uses is a major determinant of a member’s interest and commitment to the organization. The degree to which the member behaves in the organizational set standards is proportional to the degree to which his personal needs are met. The transactional leadership style stipulates the contingent rewards for adherence to the set goals. Therefore the member is motivated to behave in an ethical or unethical way according to the rewards or punishments. As burns asserted, leadership is not only supposed to bring change and achieve goals, but it is also supposed to change the people to become better too. This puts the transformational style in perspective; the member is motivated to behave either ethically or unethically based on the level of trust and loyalty to the leader. However, Bass argues that, leadership that employs the transformational approach is amoral. Consequently, he is of the view that this style of leadership’s ethical component and morality is questionable. Social learning/ modelling theory According to Trevino & Brown (2004), modelling is agreed to be one of the means for passing on behaviours, attitudes and values. This means that leaders are likely to be models of how the members will behave ethically. In transformational leadership style, it is the trust, loyalty and admiration for the leader that the follower feels that motivates him to exceed his expectations. Therefore, if the leader is unethical, there is a high probability that the follower will also be unethical. On the other hand, the social learning theory contends that since leaders have a role of authority and power to reward and punish, then followers will embrace behaviour that is rewarded and avoid what is punishable. As Trevino and Brown (2004) observes, leaders choose the kind of rewards or punishments for behaviours in an organization. Therefore, in agreement with what the modelling theory contends, “Consequences inform observers about the benefits of the modelled ethical behaviour as well as the negative effects of modelled inappropriate behaviour” (Trevino & Brown 2004, p. 73). Leaders provide favourable consequences for the followers which in the long run reflect to a feeling of obligation to meet the required standard of values and behaviour. When a leader ‘walks the talk’ he translates organizational values into action. This generates respect and trust from his followers. If he is willing to sacrifice personal expectations for the organizations good, then his followers are also willing to do the same. This theory works for or against the ethical standards; if the leader is unethical and stands for unethical behaviours the follower will be unethical. The reverse is true. Social Exchange Theory The style of leadership in an organization determines the kind of relationships that the leader and the followers have. In the transactional style of leadership the obligations are contractual in nature and are not dependent on trust. However, social exchange operates without the obligations specified in a contractual nature. Here, members perceive the trustworthiness of the partners and this becomes the most important thing in developing and maintaining relationships. Social exchange theory suggests that this the relationship between the leader and the followers works on three basic principles; perceived fairness, trust to the leader and a liking or affection for the leader. When followers perceive that the leader treat them fairly, then they are motivated to offer themselves and support the leader and the organization he represents. In likewise manner, if the members of an organization are able to trust their leader, they behave in the ethical behaviour the leader stands for. High quality leader-member relationships are seen in the way members like and admire their leader. According to Trevino and Brown (2004) if employees do not like or are frustrated with a leader, they will retaliate in ways that harm the leader and the organizations. In the transformational leadership, trust and reputation plays a key role to refute fears that of exploitation and one-sidedness. Therefore, this kind of a leadership may not be able to work for new leaders. Time is an important factor in this kind of a relationship which makes the transactional relationship a starting point to build the trust and reputation required. Conclusion Leadership is an on-going process whereby leaders and those who follow them raise each other to greater levels of motivation and morality. Both approaches are needed. As earlier discussed, contingent reward and management by exception are the main components of the transactional leadership style. This means that a leader will provide reward contingent to following the ethical guidelines the organization has set. Management by exception alludes to the fact that the leader will take correction when there is a problem. In this view, should a member of the organization not abide to the ethical expectation the organization has set, then he is fully aware of the consequences. As opposed to transactional leadership that employs rewards and punishment to direct follower’s ethical behaviour, transformational leadership raises the level of moral and ethical development of the followers. Followers in the transactional leadership meet expectations motivated by the reward they receive. However to exceed their expectations, then the transformational leadership is necessary. Transformational leadership transcends the members’ self- interest to meet the larger organizational goal (Mayer et al, 2012). Both styles of leadership can work for or against the ethical principles a leader and his organization stand for. Therefore, it is the work of the leader to determine the kind of leadership in every situation. Finally, the ethical tone of an organization is set by its leadership style. Leaders are not only supposed to be moral persons but they are also supposed to model ethical behaviours by using reward and punishment on their followers. References Bass, M. & Steidlmeier, P., 1999, Ethics, Character and Authentic Transformational Leadership. Leadership Quarterly, 10, 181-218. Burns, J., 2003, Transforming Leadership: A new Pursuit of Happiness, NY: Atlantic Monthly Press, Pages 27-29 Ciulla, J., 2003, Ethics and Leadership Effectiveness, 13-ntonakis. qxd Mayer, D., Aquino, K., Greenbaum, R & Kuenzi, M, 2012, Who Displays Ethical Leadership, and Why Does it Matter? An Examination of the Antecedents and Consequences of Ethical Leadership, Academy of Management Journal, Vol 55, No 1, 151-17. Martinette, C., 2002, Learning organizations and Leadership style, National Fire Academy Mihelic, K. Lipicnic, B & Tekavcic M 2010, Ethical Leadership, International Journal of Management & Information Systems – Fourth Quarter, Vol 14, Number 5. Obiwuru, T. Okwu, A. Akpa, V & Nwankwere, I., 2011, Effects of Leadership Style on Organizational Performance: A survey of Selected Small Scale Enterprises in Ikosi-Ketu Council Development Area of Lagos State, Nigeria, Australian Journal of Business and Management Research Vol. 1 No.7 (100-111). Raja, A & Palanichamy, P n.d, Leadership Styles and its Impact on Organizational Commitment, The Journal of commerce, Vol 3, NO. 4. Rukwami, K. Ramesh, M & Jayakrishnan J 2010, Effects of Leadership Style on the Organizational effectiveness, European Journal of Social Sciences – Volume 15, Number 3 Stewart, J., 2006, Transformational Leadership: An Evolving Concept Examined through the Works of Burns, Bass, Avolio and Leithwood, Canadian journal of Educational Administration and Policy, Issue No. 54 The Transformational Leadership report, 2007, Retrieved from www.transformationalleadership.net/products/transformationaleadershipReport.pdf Trevino, L & Brown M 2004, The Role of Leaders in Influencing Unethical Behaviour in the Workplace. 03-Kidwell.qxd Read More