Executive summary A brief definition ofethical leadershiphas been discussed through this paper along with that its advantages in the current businesses has been also evaluated here. Apart from that, different principles of ethical leadership have been mentioned and its advantages business operation has been identified in this study. Moreover, theautomobile industryhas been selected to conduct this study. Importance of ethical leadership in this sector has been discussed along with thatTrait theory of leadershiphas been used to get proper justification of the importance and benefit of ethical leadership. Challenges that leaders of the automobile industry commonly face in order to maintain ethics have been highlighted in this paper. On the other hand, maintaining ethical leadership during business operation and HRM practises help the automobile companies to overcome those issues has been mentioned in this paper. Lastly, an overall summary and in order to highlight the key points conclusion has been added here. 2
Table of Contents Introduction................................................................................................................................4 The growth of ethical leadership................................................................................................4 Ethical leadership in automobile industry..................................................................................6 Conclusion................................................................................................................................10 Reference list............................................................................................................................11 3
Introduction Ethical leadership is one of the most effective leadership styles for businesses as with the help of this leadership style productivity of a company can reach to maximum level. Along with that a firm can maintain the transparency in its business operation with the help of ethical leadership that will automatically improve the brand reputation. In this study a brief discussion about ethical leadership and its importance in the businesses will be conducted along with that the reason for its popularity will be explained here. Automobile sector is selected for this study in order to discuss the various aspects and elements to ethical leadership in context to the industry. The decision making issue faced by an ethical leader in the industry will also be discussed by using leadership theory. Further, the way in which an organisation within the sector can benefit from ethical leadership will also be discussed. Lastly, the outcome of the study will be shown in the conclusion part of this study. The growth of ethical leadership Ethical leadership is a leadership style that gives all the focus on ethical beliefs and values. Ethical leadership is also defined as leadership that promotes interpersonal relationships along with that holding respect and equality for others (Qinget al.2020). Leaders who follow ethical leadershipin the business always give their all focus on the collective values, morals and beliefs of individuals. According to the description ofJambawo (2018), ethical leadership has five principles;respect, service, community, justiceandhonestythat every leader should maintain during the leadership. Ethical leaders always respect others and this is the main reason they can manage employees in a better way than others. Honesty and maintaining equality in the business operation help these leaders to gain more respect in the existing market. People also get attracted towards these leaders for this transparency. 4
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Figure 1: Ethical leadership (Source:Jambawo, 2018) Ethical leadership is gaining more popularity nowadays as it is extremely important and effective for businesses. As per the statement of Sahaet al.(2020), running a business operation in an ethical manner can easily catch the eyes ofpotential investors. Therefore, businesses will get more funds and will be able to invest those funds to improve the service quality. In this way businesses will achieve more success with the help of implementing an ethical leadership style. On the other hand, one of the biggest benefits that a firm can get from ethical leadership is it help to buildcustomer loyalty. As mentioned by Agrawal and Mittal (2019), customers always get attracted towards those brands that give maximum value and maintain transparency throughout the business. Ethical leaders always give their more focus on productivity and try to serve others better. Hence, a firm can get a loyal consumer base with the help of ethical leadership. Ethicalleadersalwayspromotecreativityandinnovationintheworkplacetherefore, employees get more freedom in the workplace that automatically increases their motivation level during the work. Therefore, productivity of employees will improve as leaders who follow ethical leadership do not try to control employees always rather than that they always try to give them responsibility and show trust. In this way a better and healthy workplace will develop with the help of this leadership style. In the words of Fuchset al.(2019), a company can achievegood presswith the help of ethical leadership as it helps in the brand name development process. Nowadays, social media plays an important role in the decision making 5
process of consumers as they get manipulated by influencers. Hence, maintaining ethical leadership can maximise the leaders’ reputation. Therefore, social media and news channels will also cover these types of leaders on their channels therefore, leaders will get more exposureandrecognition.Thismakesthecompany’sbrandnamemorewell-known automatically. It is important for a leader to develop a good relationship with stakeholders in order to run the business operation in a smooth manner and get a competitive advantage as well. In the opinion of Sarwaret al.(2020), following the principles of ethical leadership eases the process for a leader to establish trust in partners and suppliers. Hence, multiple benefits leaders can get from it such as necessary raw material for product development the company will get therefore, an additional boost a company can achieve in their manufacturing process. On the other hand, ethical leaders always try to make the morale high of the leaders that automatically boost employees' performance level (Miao and Cao, 2019). In this way productivity of the company will increase automatically. Ethical leadership has multiple benefits such as it helps to develop a healthier working environment therefore, it will automatically attract better employees towards the firm (Asifet al.2019). In this way a companycanautomaticallyenhancethequalityofserviceandcangetcompetitive advantages in this digital era. This is the main reason ethical leadership is getting more popular day by day and most of the leaders are adopting it in their leadership style. Ethical leadership in automobile industry Automobilesectoris one of the most importantsectorsas thisindustry has a great contribution in the economic development process. This sector makes the peoples’ daily life easier with the help of providing them with advanced technologies that make peoples’ travel process easier. Ethical leadership is extremely important for this industry as in order to make an automobile company successful innovation is necessary for which employees play an importantrolehere.Hence,managingthoseemployeesandrunningthebusiness internationally the automobile industry needs to develop a healthy working environment and have to eliminate cultural differences. Along with that the industry has to eliminate conflict situationsfrom theworkplaceinorder to boost theproductivitylevelof employees. According to the description of Le and Lei (2018), an ethical leadership style will help in the employee development process and leaders can manage employees in a more effective manner. Hence, it indicates that ethical leadership is extremely important for the automobile industry. 6
Further,thenumberofpeopleemployedintheautomotiveindustryiscontinuously increasing and has reached around 864,000 people in the UK (Statista, 2021). Ethical leadership becomes important to meet the needs of the rising workforce effectively and support them in tough times like the Covid pandemic where millions of people lost their job. On the other hand, motivation and commitment of employees is extremely high for this industry as the manufacturing process of a car is not an easy job and lots of employees are essential for developing a car. In order to make the manufacturing process faster teamwork is important. Employees can work in a collaborative manner with the help of proper guidance. Ethical leaders always promote equality and tryto maintain a good working environment in the workplace that make the employees motivation level higher therefore, they are able to work in a collaborative manner without facing complexity. Figure 2: Number of people employed in the automotive industry in the UK 2013-2020 (Source: Statista, 2021) Trait theory of leadership: According to the trait of leadership theory several inborn and innate qualities along with that necessary characteristic make a leader successful. This quality can be personality factors, physical factors or intelligence factors and many more. According to the description of Wyatt and Silvester (2018), trait theory of leadership has various traits such as achievement drive, leadership motivation, honesty and many more that leaders must develop in order to make themself successful. A leader should beachievement driven,that indicates a leader must have a high ambition and in order to achieve this ambition the leader must take effective 7
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initiative. On the other hand,leadership motivationis another important trait, it indicates that a leader must set a common goal for the followers and have influenced them in order to achieve those goals with the help of enhancing their motivation level.Honestyandintegrity means leaders have to make themself trustworthy and reliable in order to develop good relationships with stakeholders. Self-confidenceis one of the most important traits of this theory as confidence of a leader must be high as they have to take risks and believe in themselves. In this way a leader can promote changes and can influence others also to accept these changes for betterment. Cognitive abilityandbusiness knowledgeis also essential for a leader as strong analytical abilities and conceptual skill is essential for a leader to improve the business performance and take it to the next level. Multiple benefits a leader can get from these theories such as an individual can easily identify the strengths and weaknesses with the help of analysing this theory. As mentioned by Gandolfi and Stone (2018), leadership traits theory is effective for any organisation therefore, aunty leader can use all the information of this theory and can benefit from it during the own leadership style. Figure 3: Trait theory of leadership (Source: Wyatt and Silvester, 2018) After analysing the trait theory of leadership it can be said that an interconnection and similarity is there between ethical leadership style and leadership traits. Honesty and giving good values can easily help the automobile industry to build a strong customer relationship. 8
However, multiple issues leaders of this industry faced during maintaining ethics in the business operation. For example, in order to develop products for consumers the automobile industry has to use natural resources that are increasing the carbon footprint of them. It is the biggest challenge for leaders to make the business sustainable. On the other hand, conflict and cultural barriers is another key issue of the automobile industry as most of the companies are running their business operation globally hence cultural barriers always work in the workplace that automatically destroy the working environment. Therefore, productivity of employees minimises and leaders face difficulty in decision making and managing those employees. Tesla is one of the most well-known companies among the automobile industry for its electric vehicles. Elon musk is the CEO of Tesla and this leader also follows the ethical leadership style and this is the main reason in order to minimise the carbon footprint of the company and make a sustainable business for improving customer relationship management. Consumers are getting maximum value from electric vehicles that Tesla is providing therefore, a positive impact on the brand name of this company is getting now. This is the main reason Revenue of Tesla is rapidly growing. In the year 2020 the company generated around 31.5 billion U.S dollar during the pandemic and after this year the company achieved almost 71 percent growth in revenue. In the year 2021 the company generated around 53.8 billion U.S dollar (Carlier, 2021). It indicates the effectiveness of an ethical leadership style in this digital age. This is the main reason most of the leaders of this industry are adopting an ethical leadership style. 9
Figure 4: Tesla's revenue 2008-2021 (Source: Carlier, 2021) As mentioned by Abraham and Rabin (2019), employees are one of the most important assets of automobile companies as without them a company cannot run its business operation in an efficient way. Therefore, human resource management of most of the automobile companies need to maintain ethical leadership in their practises in order to boost the motivation level and give the maximum benefit to employees. Toyota is another popular automobile company and its HRM developed multiple policies for employees such as providing employees retirement benefits. Pension program of the company is the main motivation factor of employees (Toyota, 2021). In this way, with the help of adopting ethical leadership style companies are growing rapidly. Toyota grabbed around 8.5 % market share in the year 2020 that makes the company the largest car brand (Carlier, 2021). Hence, it can be said that ethical leadership can help the automobile industry to expand the business more globally. Conclusion Leaders that follow ethical leadership always maintain equality, inspire employees and establish a culture of trust and respect. Ethical leadership has multiple benefits that a company can get from it such as it helps in the brand name development process, help leaders to control employees in an effective way and boost their motivation level. Therefore, the productivity level of employees automatically increases. Ethical leadership is extremely important for the automobile industry as employees play an important role in this industry. 10
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Therefore, in order to manage employees in a better way and develop a healthy working culture ethical leadership is extremely important. Hence, ethical leadership helps with the development of the HRM practises and workplace culture of the automobile industry contributing to the company’s overall performance. 11
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