At NIB (National Irish Bank), the unethical behavior of employees according to Knights and O'Leary (2005) was at no time suppressed. Leaders in this case according to the authors were largely concerned with profit maximization. This is a clear indication that when leaders fail to mould subordinates, the consequences could be dire. Indeed, a report issued by the inspector general with regard to the scandal at the institution revealed that the role leadership played in the entire scandal was momentous (Knights and O'Leary, 2005). Best Buy CEO's sexual relationship with an employee also set a bad example for other employees to follow. This is more so the case given that the two acted in a way that left no doubt in anybody's mind that they were having an affair. There were also clear disparities between the CEO and the concerned employee especially with regard to age, power, and position.
But why do leaders act unethically? May, Chan, Hodges, and Avolio (as cited in Tanner et al., 2010) argue that leaders could embrace unethical behavior in an attempt to preserve or safeguard their own careers or as a way of avoiding unpopularity. According to Hannah, Avolio, and May (as cited in Schaubroeck et al., 2012), "bad apples" have also been blamed for triggering unethical organizational behaviors. The "bad apples" could in this case be unethical leaders or other senior individuals who do not have any regard for ethical behavior. In what seems to support this assertion, a study conducted by Schaubroeck et al. (2012) came to the conclusion that the impact subordinate leaders have on those whom they lead with regard to their ethical leadership could be facilitated by leaders whose level of ethical leadership happens to be sufficiently high. The reverse is true.
Based on the reasons given above for unethical behavior, it would be prudent to explore some of the solutions that have been proposed to rein in the problem. As Tanner et al. (2010) observe, it is a leader's moral courage that determines or influences his or her resolve to embrace ethical behavior. Moral courage is in this case defined by the authors as an individual's conviction to stand his or her ground in the face of unpleasant consequences. Tanner et al. (2010) are of the view that moral leaders should be ready to embrace ethical behavior even in those instances where embracing the said behavior seems costly. According to Sabir et al. (2012), leaders also have a responsibility to ensure that their ethical behavior as well as conduct is reflected in not only their judgments but in their dealings and daily conversations as well. This way, they could in the opinion of the authors easily become role models for their followers.
The impact of unethical behavior could be vastly unpleasant. According to Knights and O'Leary (2005) past scandals perpetrated by unethical leaders have not only threatened the positions of the said perpetrators, but they have also had a negative impact on the financial well-being of the companies involved. Companies that have had to pay the ultimate price of bankruptcy include but they are not limited to Dynegy, Lehman Brothers, and Enron. Bre-X, a mining company in Canada, also went down after it was discovered that it had released falsified information with regard to the discovery of a treasure chest. HP has also had to hire a PR company to enhance its image after the discovery of a spying scandal. The company found itself in trouble for spying on journalists and some of its board members. Although the company at the time justified its actions citing the need to investigate the source of information that had allegedly been leaked, this particular unethical decision cost Patricia Dunn, its CEO at the time, her job.
In the recant past, corporations have embraced a number of initiatives in an attempt to remain on course as far as ethical leadership is concerned. Some of the initiatives adopted in this case according to McCann and Holt (2013) include but they are not limited to putting out annual reports highlighting their efforts on this front. Such actions have put some firms in corporate America on the Ethisphere's list of the most ethical companies around the globe. Some of the companies that made an appearance on this least in 2013 include but they are not limited to Adobe Systems Incorporated and Alcoa. While Adobe has in place six guiding principles it adheres to in an attempt to remain ethical, Alcoa has a well-defined Ethics and Compliance Program by which every employee must abide.
According to Sabir et al. (2012), both ethical leadership and employee performance are founded on corporate ethical values. For this reason, the authors conclude that the relevance of maintaining a learning environment for employees in the organizational setting cannot be overstated. In their opinion, for purposes of performance enhancement, both the leaders and employees should collaborate in their efforts to familiarize themselves with ethical codes and conduct (Sabir et al., 2012).
In the light of the discussion above, it would be fair to conclude that the application of the ethical leadership theory has not been based on sound understanding of the theory. This is particularly the case given the many corporate scandals that have led to the collapse of numerous organizations. Although research on leaders and their adherence to ethical standards has been scarce, recent scandals have sparked an interest on this very important issue. Leaders are increasingly being regarded instrumental in the establishment of a conducive organizational environment for ethical conduct. In the final analysis, sound application of the ethical leadership theory at the organizational level is largely dependent on the personal values and character of leaders.
Brown, M.E., Trevino, L.K. & Harrison, D.A. (2005). Ethical Leadership: A Social Learning Perspective for Construct Development and Testing. Organizational Behavior and Human Decision Process, 97(2), 117-134.
Brown, M.E. & Trevino, L.K. (2006). Ethical Leadership: A Review and Future Directions. The Leadership Quarterly, 17, 595-616.
Knights, D. & O'Leary, M. (2005). Reflecting on Corporate Scandals: The Failure of Ethical Leadership. Business Ethics: A European Review, 14(4), 359-366.
McCann, J. & Holt, R. (2013). Perceived Leadership Integrity in the Manufacturing Industry. Journal of Business Ethics, 115, 635-644.
Naubert, M.J., Carlson, D.S., Kacmar, K.M., Roberts, J.A. & Chonko, L.B. (2009). The Virtuous Influence of Ethical Leadership Behavior: Evidence from the Field. Journal of Business Ethics, 90, 157-170.
Sabir, M.S., Iqbal, J.J., Rehman, K.U., Shah, K.A. & Yameen, M. (2012). Impact of Corporate Ethical Values on Ethical Leadership and Employee Performance. International Journal of Business and Social Science, 3(2), 163-171.
Schaubroeck, J.M., Hannah, S.T., Avolio, B.J., Kozlowski, S.W.J., Lord, R.G., Trevino, L.K., Dimotakis, N. & Peng, A.C. (2012). Embedding Ethical Leadership Within and Across Organizational Levels. Academy of Management Journal, 55(5), 1053-1078.
Tanner, C., Brugger, A., Schie, S.V. & Lebherz, C. (2010). Actions Speak Louder than Words: The Benefits of Ethical Behaviors of Leaders. Journal of…