Why Leaders Fail Ethically - a Paradigmatic Evaluation of Leadership - Literature review Example

Business Ethics

Bredeson and Goree (2012) explain ethics as varied ways a person behave to situations and handles complexities to take good decisions (Bredeson and Goree 2012). However, sometimes they in order to refrain from negative consequences do not initiate any actions. People attend their ethical beliefs from varied sources like authority, culture, morality and intuition which have a direct impact on their behaviour (Bredeson and Goree 2012).

Enterprises consist of diverse processes and people, whose efficient utilisation makes it possible to attain the desired goals (McMenemy, Poulter and Burton, 2007). The concept of administering people working in entities; to attain the assigned tasks is termed as personnel, human resources or people management (McMenemy, Poulter and Burton, 2007). As per research, enterprises with better people management have less employee turnover (McMenemy, Poulter and Burton, 2007).

Enterprises facing a high worker turnover, must try to improve their people management by creating respect between managers and their subordinates (McMenemy, Poulter and Burton, 2007). One of the major reasons for high absenteeism could be related with the changes that might not have been implemented correctly or was initiated suddenly without any proper communication to employees (Nish, 2005). Lagan and Moran (2006), argues that entities are operating their business internationally with a strong competition in external environment and to have sustainability, they must make sure ethical measures. Martin (2011) believes that it is impossible to work in organisations with integrity where managers and shareholders pressurises their employees to meet the deadlines and earnings.

However, it is important for organisations to have an ethical approach; while managing the people, as it is indirectly linked with the performance of entities.

Bratton (2015 p. 360), argues that the unethical behaviour involves biasness related with salary, treating employees and offering opportunities for growth and success.

Giacalona and Promisio (2013 p.90), explains aggression and violence comes under unethical practices employed at enterprises where it is described as hostile behaviour. Specifically, aggression involves an objective to harm the wellbeing of others in three contexts; through physical (verbal), indirect and direct (face-to-face incidents) (Giacalona and Promisio, 2013 p. 90). Ethical issues in companies, arises from the dilemma that is assumed to arise when values clash with each other, for instance inefficiency in utilising available resources to manage political or governance problems (Bratton, 2015 p.360).

Bullying is considered as an unethical behaviour found at workplace, where the people are humiliated by their superiors or co-workers, individually or in groups (Paludi, 2015 p. 246.). Bullying can be done in an organisation on a direct or indirect basis; where direct or face-to-face bullying involves pushing or hitting employees; whereas indirect bullying, involves informal texts or mails that are abusive in nature (Paludi, 2015 p. 246). Impact of bullying at workplace is found to be adverse in nature, which decreases the level of motivation and productivity in a company (Paludi, 2015 p. 247).

However, entities today; are undertaking different steps like transparency at communication and better code of conducts to have better work culture and competitive performance (Bratton, 2015 p.360).

In 2008, due to unethical behaviour of bankers, the economy as a whole suffered adversely with financial crisis and diminished the wellbeing of people (Bratton, 2015 p.360). Royal Bank of Scotland mentioned that, its risks control and management process were weak and they then were more focussed to earn profitability that led financial instability (Bratton, 2015 p.360). Since then, the concept of ethical practices has further improved, where entities are subject to regular surveillance and assessment process (Bratton, 2015 p.360).

Entities are implementing Corporate Social Responsibilities in their businesses with greater transparency in order to have ethical procedures (Rajak, 2011). As per Weiss (2009), employees love to work for the companies that are ethically responsible because they care for the well being of parties involved. Fortune magazine on regular basis produce different articles regarding best companies to labour for (Weiss, 2009 p.12). Many firms like Tesco, adopts ethical management as its business model; under which, people involved beginning from the employees, customers and suppliers are dealt in a fair manner (Dransfield, 2005 p. 151). Tesco has constructed a code of ethics that have a grievance procedure to manage different issues concerned with workers, for instance, in 2003; a private landline helpline was implemented, where complaints against criminal offences from employees were recorded (Dransfield, 2005 p. 151). On the contrary, as per the report published in article ING Direct, a financial institution, in March, 2005, cheated its customers with services related to credit mortgages and investments accounts (Dransfield, 2005 p. 151).

Thus, it can be said that implementing ethical code of proceedings in businesses is highly dependent on entities itself. There are several enterprises in the global environment, that in order to have a sustainable growth and good corporate governance, are implementing the business ethics programs.

Ethics programmes, are certain terms and rules fixed by the superiors or top management regarding behaviour, decision-making and method of undertaking activities to have transparency in the processes (Weiss, 2009 pp.361-365). While dealing with employees in different parts of the globe, the entities need to manage diversity that creates an image of itself as an ethically responsible company (Weiss, 2009 pp.361-365).

Ethics programmes; other than having different codes and values, consist of wide training and assessing policies (Dubey, 2009 p.98). Generally, every organisation as per their capabilities, initiates these programmes that offer people to initiate actions while encountered with dilemmas. (Dubey, 2009 p.98). As per the article published in a journal, an author wrote that though all organisations undertake ethics programmes, yet majority of them are unaware of the importance it has on behaviour (Dubey, 2009 p.98).

Business managers for profitable businesses and to help employees improve their performance require practical measures and knowledge for managing vales (Dubey, 2009 p.98). Corporations having value based ethical management, are found to have a good corporate culture and good relationship between superiors and peers (O.C. Ferrell, Fraedrich and L. Ferrell, 2013 p.227). These programmes help to increase employees’ confidence when faced by ethical dilemmas and motivate them to perform better (O.C. Ferrell, Fraedrich and L. Ferrell, 2013 p.227).

There are certain tools that are undertaken by corporations to have better corporate governance and ethics management that requires full support from the top management for flourishing implementation.

Ethical tools are the measures undertaken by entities irrespective of their sizes (small, medium or large), by initiating certain rules and procedures to conduct and complete their related operations (Saleem, 2010 p. 487).

One of the most efficient ways to initiate good ethics is through segregation of roles and accountabilities on key personalities belonging to the organisation (Saleem, 2010 p. 487). Some of important factors that need to be addressed to have better policies in the company are:

• The programme must be approved by the CEO of the company, without whom conquering functioning of it is not feasible.
• A committee to look after the matters and errands related with programmes, must be formed consisting of top-level managers.

Code of Ethics is among specific tools undertaken by majority of companies to promote transparency of activities. According to a survey held by conference board of New Delhi, it was found out that 76% of entities consist of code of ethics (Saleem, 2010 p. 487). Some people disagreed that these policies had any value in better management, while many ethicists claimed it as the most crucial element to have a successful business (Saleem, 2010 p. 487). Crane and Matten (2010 p.188), have highlighted upon the importance of ethics education in the entities where personnel are trained through in-house or external experts regarding a proper work culture in the firm. In US, formal education on ethics has been most common, for instance, in 2006, the US troops were murdering civilians living in Iraq (Crane and Matten, 2010 p.188). These troops were offered with training to have an ethical behaviour and to protect the civilians.

However, in Asia the concept of CSR is commonly used to by companies to guide the people to overcome complexities and ethical dilemmas (Crane and Matten, 2010 p.188). Companies are implementing auditing and compliances measures in its activities to know its impact on environment, consumers and society as whole (Crane and Matten, 2010 p.189). Companies operating in Europe like Tradecraft, the Body Shop and Shell, are among the first implementers of auditing practices (Crane and Matten, 2010 p.189). Though many tools have been identified by companies to have ethical management, the most effective way to achieve it in a complex environment, is through offering proper education and information to stakeholders (Woermann, 2013 p. 159). The impact of code of ethics, CSR, auditing and education, can be known only after applying them in use; which requires great potential and skill rather than explicit rules (Woermann, 2013 p. 159). McDonald’s in 2006, undertook practical measures known as “Open for discussion”, where suggestions from stakeholders were asked to improve the operations of the company (Crane and Matten, 2010 p.190). A report published in Guardian magazine mentioned, the growing importance of CSR through online social blogs commonly termed as social reporting. However, stakeholders rather than having a general information of the working of the company’s preferred to be actively engaged in the decision-making activities (Crane and Matten, 2010 p.190).

Non-government and government organisation have diverse measures to ethics management based on their capabilities.

Government or non-governmental entities, are essentially undertaking the ethical code of conduct and practices for the betterment of the society (Crane and Matten, 2010 p.190).

Non-governmental organisations are making proper utilisation of online media platform to communicate and involve the diversified group (Information Resources Management Association, 2013 p.1632). The importance of online campaigns have proved to be more efficient when a large number of people are involved in the activity (Information Resources Management Association, 2013p. 1632). Social media platform has proved to be an efficient tool utilised by the non-governmental organisations to disseminate certain issues and complexities. For instance, during anti-governmental protests of Iran integrated support was achieved across the globe through it (Information Resources Management Association, 2013 p.1632). Non-governmental organisations are considered more mission-driven, where people have targets to be fulfilled which are the major point of difference from government companies (Svara, 2015 p.7). Decisions undertaken in the non-governmental entities are completely on board or staff members; whereas in governmental companies, these decisions are subject of debate among larger communities (Svara, 2015 p.7).

The code of ethics for the NGOs is made as per direction offered by government prevailing in the countries. For instance, Philippines government supported the NGO in developmental activities by decentralising their power in local councils, educational institutions and local governmental activities (Clark, 2003 p. 18). Governmental Corporations are entering in strategic alliances with NGOs to have better ethical management. Important bodies like UN, OECD and Organisation of African Union (AU), are actively participating in framing measures to governance corruption (Cox iii, 2009 p. 156). In contrast to government entities, various NGOs like WEF, TI and Centre for Public Integrity are adopting code of ethics to prevent frauds (Cox iii, 2009, p. 156). Countries in order to have better ethics, are initiating joint efforts from both the companies, for instance, various anti-corruptions laws have been approved in Italy in joint partnership of NGO and government entities (Cox iii, 2009 p. 156)

There is a direct relation between leadership styles and ethical behaviour of employees and followers (Darley, Messick and Tyler, 2009 p. 25). There are different styles and level of authority that a leader or manager can adopt while managing people like democratic, autocratic or “laissez-faire” (Darley, Messick and Tyler p 25).

Democratic leaders practice a method of discussing matters with employees in order to have integrated decision-making (Darley, Messick and Tyler p. 25). As per research, democratic managers are found to motivate their employees greater than autocrats’ leaders (Darley, Messick and Tyler p.25). Authors have claimed that under autocratic leadership, minority’s ideas are not given importance and they are suppressed to follow the given orders (Darley, Messick and Tyler, p.25).This concept, is termed as directive leadership, which promotes groupthink, where decisions are made by people with authority (Darley, Messick and Tyler, p.25). Groupthink often gives rise to unethical outcomes as people are de-motivated, neglected and often pressurise to do things forcefully (Darley, Messick and Tyler p. 26).

Often managers while dealing with people practice mixed styles, for instance while handling a group of people who are reluctant to work coercive-transactional style is followed (Batmanghich, 2005, p. 116). Apart from CEO and superior managers of the organisations, the board of directors need to have a good leadership, where he understands the firm’s codes and values (O.C. Ferrell, Fraedrich and L. Ferrell, 2009, p.133). However, sometimes there are conditions where people possessing strongest ethical personality involve themselves in undesirable activities. For instance, the previous CEO of Qwest, Robin Szeliga, being a part of the advisory board was accused of insider trading (O.C. Ferrell, Fraedrich and L. Ferrell, 2009, p.133).

Hobbes has argues the importance of autocratic leaders in ethical management, where they have right to practice coercive power to achieve the desired outcomes (Klikauer, 2012, p.120-150). Effective leadership is considered as, a multifaceted process where various human-affirming qualities like intelligence, focused approach, honesty and decisiveness are required (Curtis, 2012, p. 131). Leaders to have proper people management and good ethic adopt different qualities based on situation and capabilities of followers to initiate assigned tasks which are known as Pacesetting leadership (Curtis, 2012, p. 131). Bredeson and Goree (2012), explain that ethics management is an integrated approach among employees and leaders and hence, communication and decision-making should be from both the sides. Under laissez-faire leadership, leaders do not practise any authorities on his followers and they can undertake actions as per their will (Darley, Messick and Tyler p. 27). This style can often lead to irresponsible behaviour and ethical issues in the management, thus, must be implemented occasionally in work culture (Darley, Messick and Tyler p. 27).

Based on previous literature and findings, it can be said that people management has become a tough task these days. Enterprises are initiating their operations in various countries that include diversified culture and practices. It has been found out that, entities that do not treat their employees with respect are facing a high turnover that can be improved only by good leadership and communication. Unethical behaviour is harmful for companies, as it can reduce sustainability and performance of the firm. In order to have good corporate governance, entities like Tesco are having a transparent work culture with better communication and information. However, there are many entities involving themselves in unethical measures in spite of knowing their corporate values and vision to earn excessive earnings.

Enterprises implement different ethical tools like education or training programmes, code of ethics, auditing, compliances and distributing roles and responsibilities among superior personalities. Tools implemented by NGO and Government organisations, are different as people working in NGOs are under a board of directors; but in public entities, decisions are made by a diversified group of people. Recently, government and NGOs in countries like Philippines, are working together to offer better services to people. NGOs are making use of online social media platform to make people aware internationally regarding political crisis.

Leaders adapt different styles to motivate their employees and to have an innovative work culture. Leaders can adopt different technique while managing their followers like democratic, autocratic and laissez-faire. Democratic leaders are found to be most effective leaders, as they let their subordinates participate in decision-making. Better participation and communication with employees creates a friendly environment that is helpful for the entities to achieve their desired outcomes in an efficient manner.

However, entities along with ethical tools and efficient leadership styles need to conduct a PESTLE analysis.

Kachru (2009, p.84), has explained the concept of PESTLE analysis as a detailed investigation of factors present in the external environment. These factors are related with political, monetary, social, environment and technology that have a significant impact on the workings of entities (Kachru, 2009, p.84). The acronym for the PESTLE is

• Political: These are linked with government policies, political alignment and taxation policies at national and global level.
• Economic: Factors like inflation, interest, disposable income and GDP comes under economic.
• Social: Consumer habits, changes taking place in tastes and preferences with health and education comes under social factor.
• Technology: Investment undertaken by the government in research and development area often impact the industries. Through better investment programs, new and advanced technologies are implemented everyday that can affect the performance of enterprises (Partridge and Sinclait-Hunt, 2005, p. 77).
• Legal: Rules related to employment, company law and health comes under this category that guides the enterprises to have ethical approach at proceedings (Partridge and Sinclait-Hunt, 2005, p. 77).
• Environmental: Companies while undertaking their operations requires preserving the limited resources available in the society like water.

This analysis is especially to understanding the external market and is efficient tool to have better decision-making based on situation and changing taking place in the surroundings (Kachru, 2009, p. 84). Entities are part of specific industry which is subject to changes like tax rates, depression, inflation and increased competition among players.

Entities that conduct PESTLE analysis in their operations, are able to handle complexities efficiently as they able to strategise their approach based on planning. When strategies are initiated by entities in pre-planned manner, there are greater chances of success (Kachru, 2009, p. 84). Moreover, through PESTLE analysis, information related to different fields can be utilised to have a competitive edge over other players. Thus, it should be conducted regularly to have better management and sustainability in the future. For instance, innovation and technologies that are new to the market can be implemented by the entities to serve their current and potential customers. Timeliness in operations, standard quality products and good services generates satisfaction among customers that are advantageous for the companies for growth (Kachru, 2009, p. 84). Moreover, entities with globalisation are entering emerging market that requires information of factors that can affect their success. Thus, PESTEL analysis is an effective tool to have strategic development of entities and must be implemented regularly for having ethical management.

Reference list

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