The Institute for Ethical Leadership was founded
in 1998 to raise awareness of the importance of ethical leadership
and to provide opportunities for leaders to come together to discuss
and learn how to apply high standards of ethical practice in their
work. Through meetings, conferences and seminars the Institute has
brought an ethical focus on key issues ranging from the environment
to health, business and education. It is now working to bring a
stronger focus on teaching and learning through the creation of
a new discipline of ethical leadership.
Fraud and falsification are highly destructive
to market capitalism and, more broadly, to the underpinnings of
Our market system depends critically on trust.
Trust in the word of our colleagues and trust in the word of those
with whom we do business.
Former Federal Reserve Chairman
Wisdom traditions that encompass the history of human civilization
have right relationships as their core value. Each of these traditions
enjoins their leaders and citizens to act with compassion and thoughtful
tenderness towards others, which is the hallmark of the noblest
spirit of our humanity. Trillions of acts of decency, respect and
fair play have allowed societies to evolve from their primitive
beginnings to conditions where the rule of law and a constitution
of rights and privileges protect men and women in modern diverse
Unfortunately, it is when hard won improvements
to the common good go terribly wrong that we most notice them. This
does not mean, however, that we should take rare incidents of wrong
doing to be the description of society. Rather, we need to mine
human wisdom for the gold standard across time in order to establish
"best practices" for the future. In so doing we come to
understand that we are social creatures, driven by our emotions
whose life force flows into the spaces between us. If we pollute
the emotional environment with toxins of dishonesty, anger and greed,
we diminish the quality of the atmosphere in which we operate. Conversely,
if we flood this space with integrity, fairness decency and enthusiasm,
we are empowered to deliver our best performance and creativity.
This is where leadership becomes most important;
but not just leadership at the top. While we know that senior leaders
set the tone for action, they do not by themselves achieve the outcome
for the organization. It is how leaders at every level act to inspire
and promote right action that determines the performance and the
culture of the whole. This article addresses this most important
contribution to organizational success, namely, the emotional tone
that permeates throughout and how it influences the many choices
made by those who lead and those who carry out the day-to-day activities
of doing business.
In this article we also show that just as humanity
can no longer ignore the impact its activities have on the physical
environment, so people cannot ignore the effect of the quality of
their relationships on bottom line profitability. As described by
Daniel Goleman(2) in his book, Social Intelligence, there
is an emotional economy that underlies the performance of the human
capital on which all business success is built.
Working with social and emotional intelligence
is the hallmark of the ethical leader. This article examines the
qualities of such a leader who has the courage to stand up for what
is right and knows not only what to do but also what is worth doing.
The article also describes how the qualities of ethical leadership
can be developed through training, how they can be measured, and
how they benefit the individual, the team, the organization, and
society as a whole. Finally, we conclude with an assessment of the
relevance and importance of these qualities to leadership development
The Ethical Leader in Action
In her important recent book Megatrends 2010:
The Rise of Conscious Capitalism, Patricia Aburdene(3)
describes "Leading from the Middle" as one of seven new
megatrends shaping the way that business is responding to the challenges
and crises of our time. In the middle is where you find a host of
ethical leaders, "ordinary" managers operating from the
strengths of "values, influence and moral authority."
Aburdene describes how Barbara Waugh, a corporate change agent at
Hewlett Packard, has nourished the initiatives of middle managers
to lead the corporation in ways it would otherwise not have gone,
or certainly not as quickly or effectively: "bringing technology
and infrastructure to the world's poorest countries;" gathering
in-house "sustainability advocates" to become a "potent
minority" to influence HP in "making a difference in the
world;" sponsoring a senior scientist's dream of a "One
Mile Walk through Time" to illustrate how we got to where we
are and how we must think about the challenges ahead. All of these
activities show the ethical leader in action, emphasizing that organizational
success is not just about profits, but most of all about building
relationships that release the energy and creativity of people inside
and outside the organization to work together to make a difference.
What is Ethical Leadership?
The ethical leader understands that positive relationships
are the gold standard for all organizational effort. Good quality
relationships built on respect and trust-not necessarily agreement,
because people need to spark off each other-are the single most
important determinant of organizational success. The ethical leader
understands that these kinds of relationships germinate and grow
in the deep rich soil of fundamental principles: trust, respect,
integrity, honesty, fairness, equity, justice and compassion. Stephen
Covey(4) calls such principles the "laws of the
universe." The ethical leader knows that by acting in accordance
with these laws, living in harmony with these basic principles,
human enterprise flourishes and is sustained.
Early last century the German philosopher and
theologian, Martin Buber, described these successful relationships
as "I-Thou" relationships, in which people recognize the
intrinsic worth and value of others and treat each other with sincerity
and respect. In the language of the 18th century German philosopher,
Immanuel Kant, this is the principle of always treating the other
person as an end and never merely as a means to serve your own personal
interests. The ethical leader moves and acts in a world of I-Thou
relationships, where in any situation, to the fullest extent possible
in the circumstances, the intent is to honor and respect the worth
of the other person.
In this way the ethical leader embraces the act
of service as described by Robert Greenleaf(5) in his
concept of "servant leadership." The effective leader
acts as a servant to others engaged in the enterprise, not in any
sense of inferiority, but as one who empowers others to achieve
success by focusing on right action. The ethical leader understands
the truth of our interconnectedness to each other, and that it is
through our willingness to serve each other that we release our
combined energy and potential to benefit the greater good of which
we are all a part.
The Importance of Ethical Leadership
Fostering positive relationships provides benefits
at three levels of organizational life. It is important to the individual
as he or she comes to work every day and engages in activities that
can fall anywhere along a spectrum from rewarding and fulfilling
to disempowering, toxic and debilitating. No less in need of empowering
ethical relationships is the team, large or small, formal or informal,
project-focused or maintenance-oriented-in every case it depends
on supportive relationships among team members.
Finally, the organization as a whole with vast
spans of communication and disparate areas of responsibility needs
a bonding agent to make people feel they are making a unique and
valuable contribution to the whole. Ethical leadership across all
three levels nourishes the relationships that empower human enterprise.
Individual personal well-being. Patricia Aburdene(6)
decries the impact on 21st century life of what she calls "unconscious
capitalism," a human doctrine focused on profit and unmindful
of the collateral damage to people, society and the ecology of the
planet. The megatrends she describes constitute the rise of "conscious
capitalism" where people let their actions be guided by moral
principles. This way of thinking recognizes that in addition to
the economy of financial transactions there is an emotional economy
where emotional exchanges are registered in our bodies and determine
the quality of our mood and performance. Biologist Bruce Lipton(7)
and psychologist Daniel Goleman(8) have produced an impressive
body of research, which reveals that the internal chemistry that
supports our life and well-being is being driven and molded to a
very large extent, and for better or for worse, by others. Just
as we can no longer ignore the environmental science on climate
change, so we can no longer afford to ignore the human cost that
science is revealing about the effect of emotional toxins on our
work, family and personal environments.
Energizing the team. Modern evolutionary theory
outlines the extent to which collaboration and team effort have
played a major role in our species' rise to dominance. Research
by Daniel Goleman(9) illustrates time and time again
in workplaces ranging from high tech scientific establishments to
manufacturing plants and sports teams that "the whole is never
the sum of its parts." It will always be greater when people
work together, supporting and encouraging each other to achieve
their personal best and compound the performance of the team. This
kind of team effort derives from relationships where people value
the worth of all members and where the leader working with emotional
intelligence "lubricates the mechanism of the group mind."
The organizational whole. At the organizational
level the best model to emulate for exquisite performance comes
from biology in the form of our own physical human body. Here trillions
of cells work in perfect harmony and cooperation, somehow "knowing"
what to do to support one another to produce health and well-being
of the whole. If an outlaw or cancer cell breaks this code and goes
unchecked, it can destroy the body. There is a clear analogy to
the business organization. Just as the disease of cancer or other
breakdown occurs in the human body if the cells don't work together,
so in business organizations if people don't honor each others'
worth and recognize their interdependence, so sub-optimal performance
or even breakdown results.
Benefits to the Organization
An ethical organization is a community of people working together
in an environment of mutual respect, where they grow personally,
feel fulfilled, contribute to a common good, and share in the personal,
emotional and financial rewards of a job well done. There is a shared
understanding that success depends on a constellation of relationships,
both internal and external, not all of which are under the organization's
control, but which it can influence through the way it operates
from a platform of ethical principles.
It begins by treating its people well, knowing
that a satisfied and happy workforce will share that emotional contentment
in positive interactions with customers and clients. Similarly,
ethical leadership in the organization means that it will maintain
positive relationships with its contractors and suppliers thereby
reaping the benefit of their good will and service in return. Externally
in the community and society at large, the organization operating
on ethical principles will have a stellar reputation as a good corporate
citizen, honoring its social responsibility and demonstrating a
willingness to carry on its activities in accordance with all regulatory
requirements. Operating in this way, the organization enjoys the
prospects of continuing economic success where its products and
services are well received and its reputation engenders good will,
which translates into ongoing support in the community and in the
Implications for Leadership Development
Understanding the importance of ethical leadership
for organizational achievement has significant implications for
leadership development. The key to business success is getting things
done and we now understand more clearly than ever before that this
depends on those who manage in the middle. Patricia Aburdene(10)
says it succinctly: "The leadership that millions of managers
practice-quiet, modest, behind-the-scenes-is more persuasive and
more effective than the bold, heroic leadership we associate with
CEOs and other top leaders." Joseph Badaracco(11),
author of Leading Quietly: An Unorthodox Guide to Doing the Right
Thing, makes the same point: "The vast majority of difficult,
important human problems-both inside and outside organizations-are
not solved by a swift, decisive stroke from someone at the top.
What usually matters are careful, thoughtful, small, practical efforts
by people working far from the limelight."
Knowing this, the focus of leadership development
should be on producing leaders in the middle who have personal ethical
competence, who are good models for those around them, and who can
empower others to get the work done in ways that promote harmony
and maintain good relationships. This calls for leadership development
specifically focused on training ethical leaders throughout the
Developing Ethical Leaders
A dominant theme in the literature on leadership
is that it can and must be taught. The success of enterprises large
and small depends on seeing leadership as a set of skills and competencies
that can be learned through study and practice. When it comes to
ethical leadership such learning must take the form of deep personal
reflection guided by materials that distill the essence of moral
principles and leadership insights into specific qualities or characteristics.
Exhibit 1 shows example items from a set of three measures called
The Ethical Leadership Scales http://www.ethicalleadership.com/EthicalLeadershipScales.html
developed by the authors specifically for the purpose of teaching
Exhibit 1. The Ethical Leadership Scales
Ethical Competence Scale
Personal Record Form
Personal Ethical Competence
How we maintain our personal commitment to an ethical life
we are grounded in thought and action
||Always in Place
||Usually in Place
||Sometimes in Place
||Rarely in Place
||Never in Place
||Being reliable and dependable.
Being willing to admit mistakes.
Being true to your word.
Being worthy of confidence.
Ethical Leadership Scale
Personal Record Form
Qualities of the Ethical Leader
||Always in Place
||Usually in Place
||Sometimes in Place
||Rarely in Place
||Never in Place
|1.Acts with integrity
Keeping promises and commitments and expects others to keep
Maintains loyalty to those not present.
Acts with honesty.
Takes responsibility and cleans up after mistakes.
Ethical Organization Scale
Personal Record Form
in an Ethical Organization Factor
of an ethical organization explaination
||Always in Place
||Usually in Place
||Sometimes in Place
||Rarely in Place
||Never in Place
|Relationships with the worlforce
||Creates a safe, healthy, attractive
work environment for its workforce.
Treats members of the workforce with dignity and respect.
Provides fair and equal opportunity for advancement without
regard for ethnicity, gender, age or other distinctions.
Provides physical and mental health support for members of the
Provides meaningful work. Encourages self-development for members
of its workforce.
Beginning with the understanding that effective
ethical leadership depends on personal ethical competence, the Ethical
Competence Scale is used to give respondents the experience of reflecting
in a comprehensive and rigorous way on the level of their ethical
competence across 30 items covering personal ethical competence,
social ethical competence and global ethical competence. This personal
reflection is followed by small group discussion, simulation and
role playing focused on where and how these specific competencies
apply in their industry or business. Examples of real or potential
ethical breaches are raised and participants are challenged to apply
creative thinking to identify strategies and solutions for dealing
with these problems.
Following this rigorous focus on personal ethical
competence, the Ethical Leadership Scale is used to engage participants
in reflecting more specifically on the leadership qualities needed
to ensure their group or team maintains positive ethical relationships
in all its work. There are 40 items on this scale covering relationship
to self, relationship to others and relationship to the whole. Techniques
of role playing, simulation and scenario writing are used to enhance
this experience. In all of this work there is no substitute for
deep personal engagement in the issues, because this kind of learning
must move from head to heart and then from heart to heart throughout
At the level of the larger organization, the Ethical
Organization Scale is used to engage leaders at different levels
and from different parts of the organization to consider how well
the organization as a whole is doing on such issues as treatment
of the work force, relationships with customers or clients, relationships
with contractors and suppliers, and external relationships in the
community and society at large. There are ten items on this scale.
The kind of discussion engendered by these items usually reveals
discrepancies in the perception of leaders about various facets
of organizational ethical performance. Uncovering these differences
provides fertile ground for problem solving and creative thinking
about what needs to be done to improve things.
The kind of leadership learning described above
needs to be spread out over time, allowing the concepts and principles
to be internalized, and providing for opportunities to bring real
life issues to the table for discussion and potential resolution.
Depending on the size of the organization and other factors such
as location of offices, manufacturing plants and stores, the learning
should be carried out both with team leaders from different operations
meeting together, and with team leaders working with their own team
members to understand the strength of an ethical team. Face to face
meetings can be supplemented with online and other forms of interactive
It is most important that the learning be guided
by materials that embody the new knowledge from science and from
research on leadership as well as the ancient principles from ethics
so that participants are challenged to think broadly and deeply
about their work. The 21st century is taking us into uncharted territory
in terms of what it means to act as global citizens transcending
all barriers as we struggle to live together well in an interdependent
finite world. The future is now literally in our hands, and we need
to be vigilant, resourceful and comprehensive in our quest for new
learning to carry us through. Nowhere is this more important than
in the learning we embrace through leadership development.
One of the further implications of the learning
process discussed above is the need for leadership development practitioners
to enhance their own learning about ethical leadership. Marrying
the study of ethics with leadership reveals a new discipline of
study with ethics at the core supplemented with content from several
other disciplines including leadership, psychology, history, economics
and ecology. Exhibit 2 presents the structural elements of the discipline
of ethical leadership(13).
Exhibit 2. The Discipline of Ethical Leadership
The content, the body of literature, that contains
the underlying principles and premises of the discipline of ethical
leadership does not have to be created or invented. It has been
part of human traditions for thousands of years. The history of
ideas that has led to our present level of thinking about ethical
behavior and right action towards others and the planet is well
established and recognized.
Contributions towards ethical thought are abundant from established
areas of knowledge in philosophy, psychology, the religions and
spirituality, leadership, science, the environmental movement, personal
development, health and wellness, etc. Only thoughtful choice and
selection are required to pick out the very best information as
This interdisciplinary approach to a knowledge
base is in keeping with current thinking as the barriers and borders
between disciplines break down and where joint projects across these
lines are becoming the norm and are leading to the best results.
In choosing content, however, some essential parameters
and principles regarding the practice of ethical leadership stand
out. Chief among these is to understand that ethical practice is
universal and applies to relationships among all of humanity and
between people and all living things, including the planetary systems
that support life. This means that the basic principle of not harming
others for one's own benefit is a sacred universal principle and
is not subject to cultural interpretation. Respect for others in
all their diversity and valuing the myriad relationships in the
web of life underlies all right action.
The threads we need to weave together to create the cloth of ethical
leadership may be viewed conceptually as shown below.
||HUMANITIES & THE ARTS
The authors are currently using the leadership
development model described above in a project called Focus on Ethics,
which they are conducting for the real estate industry in the Lower
Mainland of British Columbia in Canada. Working with the leadership
of two large real estate boards in Metro Vancouver and the Fraser
Valley, they have designed a program to raise ethical awareness
among a core group of approximately 80 real estate professionals
in a number of offices. From this group 20 will receive additional
training to become Facilitators of Ethical Leadership. The facilitators
acting under the guidance of the project managers will then train
their own teams so that several hundred real estate professionals
become exposed to focused study on how ethical practice benefits
their industry. This model for disseminating learning across a network
of relatively independent real estate offices is expected to impact
several thousand professionals over the following years, bringing
a corresponding enhancement of ethical practice across the whole
Measuring Improvement in Ethical Leadership
The approach to the development of ethical leadership
described in this chapter can essentially be seen as a targeted
intervention aimed at raising the standards of ethical practice
within and across an organization, association or profession. As
such the outcome is measurable in a variety of ways.
Because behavior is directly influenced by thinking, the
first place to look for change is in the perceptions of those who
have gone through the learning process. How have their perceptions
of their own ethical competence changed as a result of their learning?
The Ethical Leadership Scales described above are designed to measure
this change when they are used for that purpose as a research instrument.
Measuring change in perception.
The items on the Ethical Leadership Scales are scored from 1 to
10 according to how strongly the quality in question (for example,
integrity) is perceived by the respondent to be in place in his/her
behavior, across a range of judgments from "never in place"
to "always in place."
Specific instructions are given on how the scoring
is to be done. The instrument is scored in this way as a pre-test,
that is, at the beginning of the training period before any discussion
about content has taken place. Using an anonymous research number,
participants report their scores on each item as well as their total
score, which is calculated out of a possible 100 to give an "ethical
quotient." Neither the individual item scores nor the total
score are of any particular interest to the researcher. What is
of interest is the change that takes place after the participant
has gone through the learning process (the intervention). To measure
this change the participants complete the instrument a second time
following the learning process (the post-test) and report their
scores in the same way as they did on the pre-test.
Using a statistical analysis of variance, the
researcher is then able to ascertain what changes in perception
have occurred. This information then provides new content for discussion
about exactly what kind of learning has taken place. In some cases
the scores increase, showing that the learner perceives improvement;
in other cases the scores decrease, showing that the learner probably
has a better appreciation after the learning of what a particular
ethical quality implies. In all cases it is certain that the participants
have been engaged at a deep reflective and emotional level in thinking
about their ethical competence with respect to their organizational
work, as well as in their personal lives.
measures. A whole range of factors in corporate life are
affected by the ethical behavior of the organization as a whole
and by the behavior of workers within the organization. At a personal
level stress related illness reflected in the taking of sick leave
or in absenteeism is a clear factor.
Staff turnover and grievances filed against management
are other factors. External factors include customer complaints,
number of returned items, expressed dissatisfaction of contractors
and suppliers, cases of litigation triggered by unethical behavior,
and community unhappiness with corporate behavior as reflected by
media reports, citizen protest, etc. Improvement in ethical leadership
can be measured by assessing changes in a positive direction of
these kinds of factors. To do this thoroughly requires the establishment
of appropriate research protocols that measure conditions before
and after the implementation of an ethical leadership development
process. Ultimately, improved ethical leadership will positively
impact the financial bottom line of the organization or individual
units, so this is the most comprehensive measure of all. Specific
efforts aimed at setting up the appropriate research measures and
implementing the learning program will be well rewarded by overall
improvement in performance.
Everything that has been said in this article
points to the conclusion that there is much to learn about how and
why ethical leadership needs to be developed and nourished in organizations
and throughout society as a whole. The content of this leadership
learning can be summarized in ten points that identify the essentials
of the learning process and its wider implications.
- First of all is the fundamental understanding
that ethical leadership is principle based. It is anchored in
moral or natural laws that are just as real in their effect as
physical laws, such as the law of gravity. Moral principles of
trust, respect, integrity, honesty, fairness, equity and compassion
if honored will return benefits in many ways; if broken, they
will bring negative repercussions that usually affect not only
the violator but innocent people as well.
- It follows from its grounding in moral principles
that ethical leadership is focused on service. The ethical leader
takes care that other peoples' priority needs are being served.
This is done by forming I-Thou relationships and always treating
the other person in a relationship as an end, never merely as
a means to benefit oneself.
- An organization's work flourishes when leaders
throughout the formal structure take responsibility for ensuring
that the work performed under their charge is ethically grounded.
Of course, it is important that sound ethical behavior is modeled
at the top, but it is the leaders in the middle who will ensure
that high ethical standards are set and maintained in the units
under their charge.
- All leadership development begins with the
conviction that leadership is a skill that can be learned. Ethical
leadership is grounded in a set of competencies that can be strengthened
and developed through carefully designed opportunities for reflection,
dialogue and practice.
- Competence in ethical leadership can be measured
through changes in perception of the leaders and by objective
measures of organizational performance. Leadership development
initiatives must be carefully designed to ensure that valid before
and after measurements are made.
- The foundational characteristics of both the
human and natural world are unity, interconnection and interdependence.
As ethical leaders distributed throughout the organization honor
these principles consistently in carrying forward the work of
their teams, so things work better in every way throughout the
- When the organization is functioning with good
ethical relationships throughout, people are healthier and happier,
and productivity measures improve in every way. There is an emotional
bottom line that supports the financial bottom line. Ethical leadership
honors the emotional needs of people for respect and meaning,
which are reflected in "quantum leaps in personal and organizational
- Ethical leadership is a discipline in its
own right. It has a body of knowledge to be mastered and standards
of practice to achieve. Leadership development practitioners need
to look to their own mastery of this discipline to enhance their
own effectiveness in fostering ethical leadership.
- The influence of a well functioning, ethically
grounded organization goes far beyond its own operations. As an
integral component of society that functions as a network of institutions,
organizations, communities and individuals, the ethical organization
has unlimited scope for influencing and promoting the common good.
- In the 21st century as never before people
everywhere are moving forward into a common future of global interdependence.
If that future is to be enlivened with hope and the sense of meaning
that lies at the core of human experience, it is of critical importance
that leaders everywhere be the models of ethical competence that
we now know without equivocation to be the source of human well-being
It All Comes Down to This
In this article we have said much about
the importance of ethical leadership and how it can be fostered
and nourished. We do not say that ethical competence is a replacement
for good business sense or wise political judgment. What we do say,
however, is that business sense, if it is to be good, and political
judgment, if it is to be wise, must be anchored in ethical leadership.
Without that clear moral guidance we are on a ship plowing through
dangerous waters without chart or compass. The stakes are now too
high for such reckless adventurism. All of us are both passengers
and crew responsible for each other. We know we can do that best
and achieve the gold standard in outcome when our relationships
- Remarks by Alan Greenspan
on CNBC, July 16, 2002, quoted by Patricia Aburdene in Megatrends
2010: The Rise of Conscious Capitalism (Charlottesville: Hampton
- Daniel Goleman, Social Intelligence: The New
Science of Human Relationships (New York: Bantam Books, 2006)
- Patricia Aburdene, Megatrends 2010: The Rise
of Conscious Capitalism (Charlottesville: Hampton Roads, 2007)
- Stephen R. Covey, Principle-Centered Leadership
(New York: Summit Books, 1991)
- Robert Greenleaf, The Servant as Leader (Minnesota:
The Robert K. Greenleaf Center, 1970)
- Patricia Aburdene, op cit
- Bruce Lipton, The Biology of Belief (Santa
Rosa: Elite Books, 2005)
- Daniel Goleman, Emotional Intelligence (New
York: Bantam Books, 10th anniversary ed., 2005)
- Daniel Goleman, Working with Emotional Intelligence
(New York: Bantam Books, 1998)
- Patricia Aburdene, op cit
- Joseph L. Badaracco, Jr., Leading Quietly:
An Unorthodox Guide to Doing the Right Thing (Boston: Harvard
Business School Press, 2002)
- More information on The Ethical Leadership
Scales can be found at www.ethicalleadership.com
- A more detailed explanation of the Discipline
of Ethical Leadership along with a bibliography of related books
can be found at www.ethicalleadership.com
- Stephen R. Covey, op cit