Ethical leadership also entails role modeling through noticeable actions. Trustworthiness is seen as a result of ethical behavior rather than an attribute of ethical leaders themselves. Authentic leaders maintain that people have to act in concert with their deep personal and moral values and beliefs, but instead of centering on intrapersonal courses like self-awareness and self-regulation, the chase of ethical values on a normal basis is professed as morally authentic by followers (Tanner, Brugger, van Schie, & Lebherz, 2010). The connection between trustworthiness and competitive advantage is strengthened by expounding how trustworthiness affects trust actions. In the end, sustainable competitive advantage is a consequence of the actions of employees cooperating jointly and developing organizational assets that cannot be easily duplicated or replaced. It is by way of establishing a competitive advantage and supporting that advantage through the efforts and commitment of workers that wealth is fashioned, that profits are earned and that society eventually benefits.
Trust is made up of the acceptance of risk and susceptibility deriving from the action of others and anticipation that the other will not take advantage of this vulnerability. Trust can be usefully divided into competence trust and goodwill trust. Competence trust refers to trusting that the other person or organization has the ability to control risk by meeting their promises, whereas goodwill has an emotional recognition of the moral commitment of the other not to take advantage of vulnerability. Trust is often seen as synonymous with openness, honesty, respect and the avoidance of using power unfairly (Purdue, 2001).
Relationship development behaviors reflect people focused on leadership that entails creating personal relations with others to augment shared ownership and commitment. It has been found that leaders who formed close dyadic relationships augmented the likelihood of producing enhanced long-term dedication and developing long-term trust. McAllister (1995) found that affective association was an important factor in building trust at the interpersonal level, and that leadership relied greatly upon the leader's capability to persuade others (Caldwell, Hayes, & Long, 2010).
Executive leaders are thought to set the ethical attitude at the top of organizations and form their official and informal ethical cultures. Executive leaders have been found to play a significant role in communicating ethical standards and utilizing rewards and punishments to support suitable behavior. Additionally, senior management's concern for ethics has been shown to influence an organization's values or compliance oriented approach to ethics management and its incorporation of ethics into everyday activities such as performance appraisals. Leaders have also been found to influence workers' ethical behavior. For instance, employees' observation that executives and supervisors genuinely care about ethics has been linked with the quantity of unethical conduct observed in the company. Yet, despite this evidence suggesting that leaders matter when it comes to company ethics, the exact role of leadership in persuading unethical behavior in the workplace has yet to be completely explicated (Trevino & Brown, 2004).
Caldwell & Hansen (2010) suggest that insights about the trustworthiness of leaders and the company are directly tied to long-term wealth creation. They noted that transaction expenses are recognized to be a necessary alternative for a lack of trustworthiness in organizational associations. Confirming the ...
Workers that are on the front line of many companies rely heavily on the leaders of their company to lead them in a way that is trustworthy and ethical in nature. It is the building of said trust that facilitates the company to be successful. Leaders that are not trustworthy and do not make good ethical decisions will eventually loose the following of the people within the organization. These types of leaders often bring down the moral of all employees which them results in lower productivity due to worker dissatisfaction.
In the end if a company does not have leaders that are ethical and that can be trusted the company's bottom line ends up suffering. It is often very difficult to create long-term wealth if the company is being run in a way that goes against what is socially and legally accepted in the modern business world. Good leaders have to always remember that their every move is being watched and that no matter what they do, right or wrong, someone always knows about it. Unethical behavior is something that is not easily overlooked or forgiven in the business arena and once a breach has been identified it takes a big toll on the company and reputation for a long time to come.
Organizational behavior is always in the spotlight and should be carried out in the most ethical way possible. The opportunities and benefits that are lost in the end from leaders who are not ethical are tremendous to most companies. Many times the damage that is done is beyond repair and sometimes costs the company its existence in the end. It is very important that organizations make sure that they have good ethical policies in place to guide leaders in the decisions that they make since they not only affect them personally but affect the company as a whole.
A successful company will have successful leaders orchestrating their daily operations. These leaders will be able to lead by example. The will have the power to influence followers to give their best everyday to the good of the company as a whole. The will make ethical decisions on a daily basis that reflect who they are as a person. Leaders who do not behave in this way will not have the trust of those who follow them and in the end will really have no power and influence over anyone. Leaders who do not act in the same ways that they expect from their followers are not good leaders and really have no authority in the end. Good leaders recognize that they are in the spotlight at all times and that there actions are being watched by many.
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The connection between trustworthiness and competitive advantage is strengthened by expounding how trustworthiness affects trust actions. In the end, sustainable competitive advantage is a consequence of the actions of employees cooperating jointly and developing organizational assets that cannot be easily duplicated or replaced. It is by way of establishing a competitive advantage and supporting that advantage through the efforts and commitment of workers that wealth is fashioned, that profits are earned and that society eventually benefits.
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