Ethical Leadership: The Importance of Moral Decision-Making in Business

Last updated on July 26th, 2024 at 06:49 am

The decisions taken by a company are an extremely crucial part of the business as they decide the future, reputation, and growth of the company. However, a company needs to make ethical and moral decisions for a positive reputation and continuous growth. Therefore, a company must implement or integrate a leadership development program inside its important departments to promote ethical leadership.

Governments of various nations are promoting ethical leadership as moral and value-based decisions have a great positive effect on our environment as well. As companies are rapidly adopting ethical leadership, one should learn more about it to boost their career trajectory. This article is an ultimate guide for those who are willing to learn more about the importance of ethical leadership.

Let’s dive in to learn more about ethical leadership.

What is Ethical Leadership?

“What is Ethical Leadership?” is one of the most sought-after questions in the modern era, here is a simplified answer to it. Ethical leadership is a phenomenon when the managers of different companies try to lead their companies with the assistance of moral and ethical behaviour. This behaviour from managers gives rise to a leadership development program in various offices that focuses on the right doing like transparency in work and accountability of workers.

Furthermore, a leadership development program rejects the concept of immortal profitability. The final decisions of these companies are bound by moral principles and ethical logic that benefit everyone including the stakeholders, customers, managers, retailers, and employees.

Importance of Ethical Leadership while Making Decisions for Business

Making decisions related to the business creates long-term effects on the company and its growth. Hence, companies are adopting ethical leadership where moral and value-based decisions are taken which creates a long-term impact on the company. Here are some importance of ethical leadership in a company:

Generating Trust and Reliability

Ethical leadership is one of the reasons why companies are regaining their trust and reliability. Moral decisions taken by the managers create a trustworthy working space for the employees. Apart from that, these decisions by the managers of a company create a safe environment between them and the shareholders or the consumers, hence they are relying again on these companies.

When a company starts making continuous ethical decisions, its reputation regarding honesty and fairness is enhanced among consumers. That ultimately leads to a successful venture.

Reduces Legal Risks

Companies can easily reduce the mitigation risks under an efficient leadership development program that deals with ethical leadership. It has been proved that by making moral or ethical decisions a company can avoid long expensive legal suits that will create a negative impact on its reputation. Hence, eventually, ethical leadership will assist a company in saving its money, time, and reputation.

Guarantees Sustainability

When a company starts using ethical leadership it may wait to witness the difference. This is because this model works for the long-term sustainability of a company. Ethical and moral decisions by a company ensure a positive relationship between the company and a huge community of stakeholders as well as consumers.

Ethical leadership also encourages a company to make decisions for the benefit of our environment thus creating a positive and sustainable impact on society.

Creates a Positive Work Culture

Ethical leadership focuses on ethical behaviour by the employers and the employees at the workplace. This promotes a positive work culture and eliminates all types of work politics. Ethical leadership boosts employees' productivity and performance by promoting collaboration and communication among them.

Such collaboration also increases mutual respect thus creating a positive work environment. A company that has and prompts a positive work culture will automatically persuade the top talents to join that company. This will automatically increase the success rate of a company.

Top Ethical Leadership Qualities Managers must Possess

Companies that have launched leadership development programs must hire at least one manager who has the following ethical leadership qualities:

Transparency

A great ethical leader must know the value of transparency. No matter related to the business must go hidden even if it may cause an adverse impact. Transparency creates a bond of trust among the employees, employers, shareholders, and customers.

Team Building

A true ethical leader should know how to create a team that works with unity. This creates a team spirit that eventually enhances the productivity among the employees.

Promotes Intensive

A manager who encourages his employees with awards for their hard work is a credible leader. Intensive not only works as an award but also motivates employees to work with dedication.

Polite in Nature

An adamant leader is very difficult to work with. So to become an ethical leader one must be polite and kind in nature.

Learning all these ethical leadership qualities will automatically increase one's value at the time of hiring. Ethical leadership qualities can easily be learned through various online courses within a few months.

Ethical Leadership Examples

Ethical leadership is not a new concept. It has prevailed in our society for centuries. Here are some examples of how ethical leadership is used in real life:

Dick's Sporting Goods

One of the most famous examples of ethical leadership was portrayed by Dick's Sporting Goods, an American company. They decided that none of their stores would sell guns to the customers to maintain the mass security of the civilians. Initially, they had to face a huge backlash, however, with time their profits and share value saw a massive surge.

Procter & Gamble

In 2019, the company, Procter & Gamble initiated a campaign named “We See All Equal” as an outcome of ethical leadership and moral decision making. This campaign pointed out all the gender biassed stuff that the company would stop using immediately.

This Campaign also allowed the employees to get equal pay irrespective of gender. After that, the company hired top-notch employees after following guidance from ethical leadership.

Advantages of Ethical Leadership

Various offices across the world have adopted Ethical leadership because it has numerous advantages over normal business leadership. A few advantages have been discussed below:

Ethical leadership encourages employees to work with moral values and enhances their morale.
Continuous ethical works by a company automatically enhance its reputation among consumers and other companies.
A manager who possesses good ethical leadership qualities builds strong and trustworthy relationships with the shareholders.
An efficient leadership development program builds strong trustworthy relationships among employees working together. It also enhances the relationship between consumers and employees.
Lastly, an efficient leadership development program helps a company hire highly talented employees who will add more value to the company.

Conclusion

In present-day work culture, it is extremely important to have an efficient ethical leader. Under whose leadership the company will gain more profits. Therefore, Imarticus Learning has brought the XLRI senior leadership program for those who want to acquire ethical qualities and boost their career.

Frequently Asked Questions (FAQs)

What is Ethical Leadership?

When a manager of a company leads his entire team with moral behaviour and ethical decisions is termed as Ethical Leadership.

What are the most important ethical leadership qualities?

One of the most sought-after ethical leadership qualities is the transparency of work by a company. This creates a better relationship between the company and the consumer.

What are the real-life ethical leadership examples?

In real-life an American-based company, Dick's Sporting Goods had banned the sale of guns at their outlets to protect innocent civilians from unknown attacks. This decision is an excellent example of ethical leadership.