Ethical Leadership for the 21st Century

What does it mean to be an ethical leader? It is talked about often in leadership, but how many of us can define what it means to be truly principled in leadership? Another question we might ask is: what effect does it have on an organisation to be run by decent leaders?
 
In a 2018 study on the impact of ethical leadership on the effectiveness of SMEs in Malaysia, Mitra Madanchian and colleagues set out to find out what it means for businesses to have principled leaders at the helm. Around 98 per cent of business in Malaysia is made up of SMEs, accounting for approximately 40 per cent of the country’s GDP. They also employ roughly 60 per cent of the population, which means that more than half of Malaysia’s workforce is influenced by leaders in the SME space.
 
When we put it in those terms, it’s easy to see why ethical leadership is important. According to Villanova University – a Catholic research university based in Pennsylvania – ethical leadership is described as “a form of leadership in which individuals demonstrate conduct for the common good that is acceptable and appropriate in every area of their life.”
 
Ethical leaders set the standard, and lead from the front by their example of the values they expect of their followers. When so much in business relies on collaboration, cohesion, and trust, it becomes impossible to dismiss the importance of ethics in business.
 
Addressing what it means to be an effective leader, the researchers note in their study that effectiveness in leadership has been defined as those who are “able to influence a group to perform their roles with positive organisational outcomes.” When those positive outcomes are achieved, the leadership can be described as effective.  

Effective Leadership in Malaysia

The researchers measured the effectiveness of leadership across 150 SMEs in Malaysia, focusing on four aspects: a leader’s ability to inspire, facilitate, motivate, and influence others.
 
Unsurprisingly, the study found that effective leadership was present within organisations that showed ethical leadership in terms of setting standards, values, decision-making, and interacting with others.
 
Ethical leadership leads to more effective outcomes in business. That’s the broad conclusion of this and other studies – but there are several specific benefits that come from ethical leadership.
 
These benefits include the creation of a healthier and positive work culture; ensuring best practices are maintained throughout the organisation; developing an inclusive workplace that holds everyone to a fair degree of accountability; and ensuring that leaders have the best interests and well-being of their employees at heart.
 
All of the above sounds great – so why, then, do some businesses find it difficult to implement ethical leadership? Even the word “ethics” can be enough to make some people roll their eyes. Why is that?
 
Ethical leadership has a number of benefits, but it’s not without its challenges. In order to be effective, principled leadership needs to be embraced by everyone. As soon as someone cuts corners and the practice is overlooked or even accepted, it can lead to a snowball effect. It's also difficult to define beyond broader terms. What might feel ethical to one leader might appear questionable to another within the same organisation, let alone across whole industries. This is when work is needed to establish common ground principles and practices to which everyone can align themselves.
 
Another challenge lies in having a clear and consistent message. As most of us know, in business we can encounter messy and complex ideals that sound great and yet, few people are entirely sure what those ideals mean. 

Integrity of words and deeds

Leadership integrity is also a potential issue. While no-one would admit to being unethical, it’s not outside the realm of reason to presume that a blind eye can be turned when mistakes are made if the outcome justifies the means.
 
Albert Einstein famously said that “relativity applies to physics, not ethics”, acknowledging how easy it can be to justify lowering our standards as leaders. In the Malaysian Government’s Wawasan (Vision) 2020, there’s a call for a united, confident Malaysia “infused by strong moral and ethical values”. It is an inspiring vision of principle and hope, one that paints a bright future of possibility and opportunity. Yet, we all know what transpired. Words do not translate to behaviour. Ethical leadership does not just mean words. It has to do with actions. 2020 has long gone, yet Malaysia remains a developing nation.
 
To echo Russian writer and Nobel Prize winner Alexander Solzhenitsyn’s observation, even the best intentions of ethical leadership will come to nothing if leaders do not have the will to act on those intentions.
 
Personally, being ethical in both words and deeds is not an easy task. There will be consistent challenges thrown along your journey that you must circumvent and overcome to ensure your word matches your actions. It is not easy but we know leadership is not something easy. It takes a lot of effort and desire to be a great, ethical leader. But, at the end of the day, it this legacy we leave behind.
 
So what are some quick tips to ensure we begin our journey to ethical leadership. We suggest the following:
1.    Remember, actions matter much more than our words – Keep your promises. Keep your word. Don’t say things you cannot fulfil.
2.    Be Clear About Your Values – Define your values. Be clear about what your priorities are and what is important to you. Once you have alignment of values and what you want, keep resolute towards them
3.    Hire People that Align with your values – we tend to hire based on skills and competence and fire based on character. Build your organisation with value-based people. It is much easier to be held accountable to ethical leadership when your team is aligned to the standard too
4.    Be Aware Of the Temptation – it is so easy to be swayed and fall. Be mindful that there are many grey areas and it is easy to fall prey to unethical behaviour which we can justify as ethical. Set the standard and hold steadfast to it
5.    Have Ethical Mentor – establish role models and mentors that hold to these high standards of ethics. And if they fall, find others.

Final Thoughts

All leaders in Malaysia – mindful that we are setting the example for future leaders – should strive to be active in the qualities of leadership we continually emphasise. Being an ethical leader is not about being perfect or even getting it right all the time. In fact, we will make mistakes and fall.
 
Rather, ethical leadership is an active commitment to be better, do better, own up to and learn from our mistakes, encouraging others to hold our performance to account just as we hold theirs to a high standard.