The Importance of Ethical Leadership

It has been said that good ethics is good business. Running a company ethically begins at the top with its leaders. Morally upstanding leaders who believe in and promote good business ethics — the principles, standards, morals, values and virtues that guide behavior in the business world — can have a substantial impact on an organization, including its employees and what they achieve, as well as its stakeholders and investors. Ethical leadership that strives to do what is right to advance the common good of employees and organizations can not only improve their business and culture but also make a difference in the community and beyond.

The business industry, however, has gained a reputation as being unethical. News headlines around the world abound with business scandals involving price-fixing, insider trading, bribery, sexual misconduct and harassment, and faulty products that corporations hide from the public. Examples of unethical behavior include the Enron scandal in 2001, which cost shareholders $74 billion; the Freddie Mac scandal in 2003, in which the federally backed mortgage financing company was caught lying about $5 billion in earnings; and the $64.8 billion Bernie Madoff tricked out of investors in what became the largest Ponzi scheme ever.

When Ethics Violations Go Public

From Watergate to Deflategate and to the most recent cover-ups committed by General Motors and Volkswagen over deadly manufacturing errors, corporate leaders who lack ethics can face criminal charges and imprisonment, and these leaders always create problems for businesses when they are caught. Unethical behavior by CEOs or managers can negatively affect employees. Corrupt executives lose employees’ respect and trust, which often decreases workers’ motivation, performance and productivity.

When unethical business practices become public knowledge, the company in question loses credibility and brand loyalty. In a worst-case scenario, a company’s illegal practices and unethical behavior can lead to ruination, says Carla Seaquist, author of Can America Save Itself from Decline?: Politics, Culture, Morality. Ruination, Seaquist says, can result in falling stock prices, recalls and fixes, investigations, lawsuits and the possible liquidation of the corporation itself, and extinction of the brand. “Whatever the means, corporations need to imagine — fully imagine — their ruination if a company practice has bad results. It means taking full responsibility, maturing as a corporation,” Seaquist writes.

What are some values and traits of ethical leadership? The best leaders are those who know what they value — for instance, attributes such as honesty, integrity, responsibility, compassion, friendliness and innovativeness — and who also recognize the importance of ethical behavior in the workplace, at home and in the community. A good ethical leader lives his or her values daily, thereby modeling them for others. A good ethical leader clearly communicates to employees what behavior is unacceptable toward coworkers, customers and shareholders. A good ethical leader should punish those who violate set standards and reward employees who comply.

Ethical Leadership in an Online MBA Program

How can someone learn to become an ethical leader? A typical two-year online MBA (Master of Business Administration) program offers a core curriculum that builds a solid foundation in business management in addition to a concentration or specialization tailored to a student’s interests. Courses include the traditional business administration disciplines of managerial accounting, finance, global economics, statistics, marketing strategy, information technology and business law. Additionally, an ethical focus factors into every online MBA program. Students will learn essential MBA skills and competencies, such as teamwork, collaboration, problem-solving and analysis, negotiation, strategic thinking, communication, leadership, and ethics. As students discover and practice ideas that can lead to a company’s competitive advantage, they also will explore the causes of unethical behavior, the importance of ethical leadership in business, and practical techniques for leading with and promoting integrity in business. Earning a degree through an online MBA program can not only put a student ahead of the competition in landing a job but also provide the tools of principled leadership.

Learn more about Baylor University’s online MBA program.


Sources:

Huffington Post: Corporate ‘Talent’ Must Imagine Worst-Case Scenario, i.e., Ruination: VW, GM, Peanut Corporation

The Workplace Coach: The Importance of Ethical Leadership

Business News Daily: How to Be an Ethical Leader

Houston Chronicle: Effects of a Lack of Ethics on a Business Environment


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