Ethical Leadership: Fostering an Ethical Environment & Culture ...

Part II: Introduction to Ethical LeadershipHow Do Leaders Affect Their Organization’s EthicalEnvironment and Culture?The task of ethics management is to define and givelife to an organization’s guiding values, to create anenvironment that supports ethically sound behavior,and to instill a sense of shared accountability amongemployees.[25]Leaders’ behavior—including everything a leader says and does—can affect theenvironment and culture of their organization in obvious or subtle ways. The “primaryembedding mechanisms” through which leaders’ words and actions shape organizationalculture are:[61]• what leaders pay attention to, measure, and control on a regular basis• how leaders react to critical incidents and organizational crises• observed criteria by which leaders allocate scarce resources• deliberate role modeling, teaching, and coaching• observed criteria by which leaders allocate rewards and status• observed criteria by which leaders recruit, select, promote, retire, and ostracizeorganizational membersThe message leaders send through these primary mechanisms are reinforced through suchadditional means as organization design and structure, systems and procedures, the designof physical space, and the organization’s rituals, stories, legends, and myths about peopleand events.[61]The influence of leadership behavior on the ethical environment and culture of organizationsis well documented. Whether that influence is deliberate or unintentional, it is powerful.Employees tend to adjust their own ethical orientations to the behavior they observe amongleaders in their organization. Research has shown, in fact, that—astonishingly!—“mostleaders are significantly more likely to lower their subordinates’ ethical standards than toelevate them.”[62] To counteract this tendency, leaders must take proactive steps to fosteran ethical environment and culture.Fostering an ethical environment and cultureResearch has shown that leaders play a critical role in creating, sustaining, or changing allaspects of organizational culture, including ethical culture. For example, one survey foundthat:Where employees perceived that supervisors and executives regularly pay attentionto ethics, take ethics seriously, and care about ethics and values as much as thebottom line, all of the outcomes were significantly more positive.[30]Other research on the relationship between ethical culture and ethical practice has shown,for example, that specific ethics-related actions by leaders (such as talking about theimportance of ethical behavior or setting a good example for ethical practice) are stronglyassociated with desired outcomes (such as lower rates of observed ethical misconduct,fewer situations inviting ethical misconduct, and higher levels of overall employeesatisfaction with the organization).[63] How leaders behave displays for employees what17