Ethical Leadership Ethical Environment and Culture

Question: Discuss about the Ethical Leadership for Ethical Environment and Culture. Answer: Introduction: The businessmen who are ready to stop at nothing today, hardly give a second thought when it comes to making a decision where its a choice between doing what is ethical and what is going to make money for them. The Volkswagens emission test scandal was where they installed a software in their cars that hacked the car emission test and made the cars pass the test even though the emission from the vehicle was far above the optimum required level. Another alarming revelation happened in Australia where its largest convenience store chain 7 eleven was found to be using illegal work practices and underpaying its employees to save costs and exploiting the young foreign workers. These cases highlight the rampant practices of dishonesty, fraudulent practices, exploitation, illegal activities, merciless profiteering and ethical malpractices (Rhodes, 2015). What is common among both these cases is that the decisions were well thought out and willingly taken. The decision makers had a fair idea about what was happening and these were not mistakes but pre decided choices that they made. In both cases, they made the choice to make money rather than caring about the compliance to the standards or doing what was ethically correct. The Volkswagen tampered with the emission tests using a software that was installed in the car (Ferguson Toft, 2015). This happened for seven long years and wasnt a one-time choice or a hasty decision that was taken. The German car manufacturing company continued to install this software and play with the emissions test for seven long years until they were caught. The 7 eleven was also going on for years before the workers let out their franchisee practices and illegal ways of working. In both these organizations, the cheating and unethical practices have resulted in huge profit margins. Volkswagen became the worlds biggest car manufacturer in the year 2009, the exact year when this scam was started. 7 eleven has been working profitably and has been awarded with the franchisor of the year prize twice (Ross, 2015). The wage fraud and the exploitation of the workforce resulted in low operational costs of the store and increased profits for both the franchisee owners and the organization. A professor of Management and Organizational Studies at Macquarie University, Carl Rhodes has said that it is a mistake to think that businesses can be ethical. Although the statement enraged the business houses and the people collectively at that time, these cases prove just that. These were two organizations with mass following and people studied their business structure and operations. They were considered successful companies with mass following. There are business people who are meticulous about the ethical standards and take pride in adhering to the business ethics (James, 2016). Organizations like Volkswagen and 7 eleven drag everyone down with themselves. Ethical behavior is not incompatible with corporate logic. The tainted reputation and bad publicity that these scandals have brought to these organizations is very little when compared to the profits that they made by being unethical. The organizations took the easy way and minted money until they were caught. The organizations that were enormous in size and had thousands of employees working for them who were aware of what was going on got away with this for so long (Somers, 2001). It was not just the organizations, but also the workers who decided to stay quiet knowing completely well what was going on and what was unethical. It is a failure in business ethics and failure of the society as an ethical group. It shows that the corporate houses and manufacturing organizations cannot be given the liberty to make the decisions related to business ethics and ethical functioning of the organizations. As in the above cases, the organizations will always choose their own business interests and profit margins with little consideration of what is eth ically or socially right or is an environmentally viable option. On the contrary, the organizations will try to find the easiest way out with little to no consideration about the ethical and morally responsible thing to do. These scandals are living examples of how the malpractices can cause damage to the business functions and their goodwill. Volkswagen had to recall million of the faulty cars and the loss of reputation along with loss of sales had made the organization hapless. The CEO of Volkswagen resigned and the 6.5 billion Euros that the organization earned through the scam will all be used up in the remanufacturing and restructuring the organization (James, 2016). The wage scandal of 7 eleven caused the chairman of the organization Russ Withers and their CEO Warren Wilmot to resign. The new CEO had to face the wrath of the disgruntled employees and franchisee owners and public dissent. Both these revelations were a collective work of scientists, NGOs, academics, media, politicians and the public and it was not just one heroic individual that came to the rescue of the distressed world. These cases are termed as a victory of the society over the unethically functioning business houses. These incidents can be considered a victory of ethical work environment. They will forever be touted as the living examples of how important the organizations ethical choices are and how their adherence is a must. They are also and eye openers for the corporate houses who think that they can get away with the practice that are profitable for the business, but ethically wrong and the monetary and non-monetary damage that they can cause to the organizations working. Instances like these promote morally responsible behavior and can serve as a wakeup call to the organizations involved in ethically reprehensible actions and practices and influence their decision making process. Ethics significance in context of leadership The leaders who lead with dignity and treat everyone with trust and respect are defined as ethical leaders. In order to lead effectively and instill trust for the organization in the minds of the customers, leaders and other team members, it is necessary that the leaders lead with ethics and moral dignity. Creating a culture of ethics is very important as we have studied the cases of Volkswagen and understand the repercussions of not adhering to the same. Ethical leaders have efficient functioning, trustworthy workforce, organizational harmony and a tremendous impact on the people associated with the organization in any form. Creating an ethical environment is a mammoth task that unlike the general implementations begins from the top (Freeman, 2006). The ethics focused culture has to begin by adoption of ethical practices of the leaders as the first step. Once the leaders have it figured out and have the commitment to ethics and ethical culture clear in their mind, the next step is t o communicate it to the rest of the team. It may be a tedious and time consuming process, but once done the impact of this is long lasting and will result in the holistic growth of the organization. Employees of any organization are ready to accept the ethical ways of working when they are explained to them in a clear and unambiguous manner. Ethical environment is the one where every decision taken is fair, encouraging and supporting to not just the customers, but also to their own employees. Ethical working needs consistent commitment, it is not a one time process or decision and is definitely not an easy option when there are easier and profitable options that are more tempting (Mihelic Lipicnik, 2010). The moral principles are made to guide a person in day to day life, in the same way the ethical directives help the organizations set a code of conduct for both the leaders and the employees. Ethics are the standards that help the leaders make decisions in their day to day life. The ethics affect the day to day working of the organization and give them the guidelines to follow. Although the ethical code of conduct for an organization is common for all the employees right from the top management to the leaders to the subordinate employees and service staff, but the implementation and the application of these begins at the top of the organization. The leaders led the way for the employees with their ethical behavior and decisions and the rest of the organization follows their lead. Leaders are considered the role models of the organization and it is their responsibility to make ethical standards the way of life for the organization as a whole (Butts, 2012). The ethics and ethical code of conduct for an organization has to be practiced in every part and function of the organization right from hiring the employees to their training, performance, performance management, mentoring and employee engagement (Nath, 2009). The results of ethical leadership are profound and all the studies performed in these areas have proved this. A lot of researches have established that practicing ethical leadership in the organization leads to higher job satisfaction and employee engagement levels. The organizations practicing ethical leadership have been found to have lower employee turnover and more sense of belongingness among the employees. The ethical conduct of the leaders makes the organization and the employees more trusting and the employees are proving to have higher ethical standards as well. The employees are attracted to and fond of the leaders who support them, encourage fair treatment in the organization and are ethically reliable. There is no denying the fact that the leaders who work ethically are always in demand and are sought for by organizations and employees alike. Their ways of working not only make the employees happy, but are also profitable for the organizations in the long run. The workpla ces now-a-days are constantly evolving and becoming an employee centric. The organizational working is becoming more transparent and collaborative and there is an increase in demand for the leaders who have their ethics and moral principles in place (Kokemuller, 2015). Ethical leadership, although looks very attractive from the outside, the intricacies involved in practicing ethical leadership are huge. It means choosing the right thing to do always and at every step. It may even mean standing against the odds and sometimes even against the peers for what is the correct thing to do. Ethical leadership involves knowing the core values that a person and the organization stand for and having the courage to live by these values in the personal and professional parts of life. It means leading in a way that honors every individual and ensures they get what is rightfully theirs (Nijhof Olaf Fisscher, 1997). For very long time, the expectations from a leader were to get as much work done from their subordinates as possible and make a profit for the organization and result in higher productivity, but with the changing times the outlooks as well as the expectations from the leaders are changing. Good leadership is not limited to competence and productivity but also to the ethical conduct that transforms the way of working of an organization and the lives of its employees and the customers. Ethical leaders ensure the carrying out of ethical practices in the organization. Leaders are the people who hold the position of power on the job and off duty as well (Education, 2016). They influence their followers and make them perform in the planned manner and complete the tasks designated for them. Effective leaders are also responsible for stimulating attitudinal change within the organization and influence the processes to make them more efficient while adhering to the organizational code of conduct. They amplify the environment of the organization and make them self reliant decision makers. Ethical leaders are also found to be nurturers and supporters and are therefore respected and admired by the employees even more (Sadler, 2011). How can organizations environment become more ethical The ethical behavior and code of conduct of an organization is a much talked about topic. Most of the organizations are however still clueless as to how to implement and encourage a culture of ethical conduct within the organization. Many business organizations treat the ethical code of conduct as a sermon that has to be delivered in the organization. When it comes to ethics, it becomes difficult not to preach, but preaching alone will only make no difference (Buren, 2010). The organization and its leaders need to lead by example and show the employees how things can be done effectively while adhering to the ethical conduct. A good ethical behavior is a reflection of smart business practices. This is the reason why the organizations today are inclined towards ethics and ethical standards (Trevio Weaver, 2006). The bedrock of ethical behavior in an organization lies on certain values that are common for all the organizations irrespective of their nature of operations. The first and most important value is respect. All organizations run on the principle of mutual respect. The organization needs to respect itself as well as the stakeholders. The employees need to respect the organization and their leaders and the leaders need to have respect for their subordinates and the organizational values. Training and coaching of the employees is a must but mutual respect acts as a catalyst to the organizational working. This will help the leaders and the management and the need for micro management will disappear (Elango, et al., 2010). The organization must not hire or perform business with the people they do not respect and the employees must not work for an organization that they do not believe in or respect. The next value that fosters ethical environment is an honor. The organization must honor go od performers and value them. The organizations generally have a policy to reward the top performers, but it is also important to go beyond the sales figures and reward the people who put in hard work and show exemplary behavior ethically. The people who have contributed to the success of the organization. These people must be honored and motivated to promote such behavior even more. Integrity is another value that must be promoted for ethical behavior in the organization. It is important for the people in the organization to know the importance of integrity (E Fox, 2013). The employees must not cheat, steal or lie and always work with integrity towards themselves and towards the organization. It is necessary to allow them the space to own up to a mistake that they have done, but it is also important to understand that integrity is not something that can be developed in a day. It is a value that a person either has or doesnt and having people who do not possess this value will diminish trust in the leaders and the organization. The employees must be taught to treat others as they would like to be treated. They must not sell the organizations values short and must always adhere to the code of ethical conduct for the organization. The employees and the organization should always be customer oriented. No doubt the primary purpose of every organization is to make and maximize the profit, but the organizations are in business only because of their customers. This is one point that no person should ever forget. Without the customers, the company is nothing. If the organization is not providing the customers what they are asking for there is no point to that company. Being customer focused reinforces the responsibility that the organization has towards the customers and gives the directives to the employees as well. Customer orientation is important for the organ ization as the company failing to implement it not only risks the breach of the ethical code of conduct but also risk the long term health of the organization. Another point that the companies must focus on is result orientation. The organization must focus on the results and work on achieving them by following the organizational values The aim of the companys functioning must not be the results achievement but the efforts that people put in to achieve them (Elango, et al., 2010). An ideal ethical leader would first establish the goals and expected results for the employees and then support and guide them to achieve the same. This will only happen if the employees have trust in their leaders and respect for them. The leaders must provide feedback to the employees and results must not be numbers, but benchmarks and lessons for the future and goals to be achieved in the present. All great organizations are made of people who have a passion for what they are doing. The organizations who perform the best are not the ones with the highest paid employees, but the employees who are driven by excitement and thrill and want to make a difference in the organization and the world. If the passion is missing within the employees, they will put in minimal efforts and this attitude is highly infectious. Thus it is important to keep challenging the workforce and keep them engaged and excited about the work to be done. Persistence is also an important factor that contributes t o the ethical working. The employees must have a will to persist and keep going even when it gets tough. The leaders have to put in a lot of efforts to keep the fuel alive in the employees and constantly guide them in making the organization ethically driven. References Buren, J., 2010. Ethical Leadership, s.l.: Noonmark Nonprofit Services, Available at: https://www.uvm.edu/sites/default/files/ethical_leadership_factsheet.pdf Butts, J., 2012. Ethics in leadership and organizations, Available at: https://www.jblearning.com/samples/0763749761/EthicalLeaderhip.pdf Fox, E., 2013. 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