Ethical Leadership Behavior and Effective Decision Making

This report analyzes the ethical leadership behavior and its relation with effective decision making. It discusses the business ethics in organizations and ethical leadership, the values that support making ethical decisions and ethical leadership within organizations, the impact of social and public stresses for ethical behavior in organizations and finally promoting the organization's CSR through values stakeholders within and outside the organization.

1Ethical leadership behavior and effective decision making
ETHICAL LEADERSHIP BEHAVIOR AND EFFECTIVE DECISION MAKING
Ethical leadership behavior and effective decision making
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2Ethical leadership behavior and effective decision making
Abstract
This report analyzes the ethical leadership behavior and its relation with effective
decision making. It discusses the business ethics in organizations and ethical leadership, the
values that support making ethical decisions and ethical leadership within organizations, the
impact of social and public stresses for ethical behavior in organizations and finally promoting
the organization's CSR through values stakeholders within and outside the organization.

3Ethical leadership behavior and effective decision making
Contents
Introduction.................................................................................................................................................4
First: Business ethics in organizations and ethical leadership.............................................................5
Second: Organisational values that support ethical decision making and ethical leadership...........6
Third: The implications of social and public pressure for ethical behavior in organizations..........8
Fourth: Promoting the organization's corporate responsibility through values internally and to
stakeholders...............................................................................................................................................9
Conclusions.............................................................................................................................................10
References...............................................................................................................................................12

4Ethical leadership behavior and effective decision making
Introduction
Organizations seek secure and stable growth through the development of a long-term
leader and follower relationship. Crews (2010) as cited in Gerard, McMillan, & D’Annunzio-
Green (2017) argues that organizations need for new approach for leadership development within
organizations. Although, organizations have failed to take the opportunities to adopt successful
leadership development before the global financial crisis. The arguments suggest that there
should be a leader and follower dialogue to put the idea of mutual-interdependency in practice.
The empirical research has provided an evidence that the ethical leadership represents an
effective leadership style. According to Copeland (2015), studies could not introduce a
multivariate model that illustrates the existence of a significant relationship between ethical
leadership and organizational effectiveness, the expectations and preferences of the ethical
leaders and the perceived values within organizations. Despite that, researchers assume that
effective leadership is the main driver for the organizational success.
This report is mainly concerned with the ethical leadership behavior and its relation with
effective decision making. It discusses the business ethics in organizations and ethical leadership,
the values that support making ethical decisions and ethical leadership within organizations, the
impact of social and public stresses for ethical behavior in organizations and finally promoting
the organization's CSR through values stakeholders within and outside the organization.

5Ethical leadership behavior and effective decision making
First: Business ethics in organizations and ethical leadership
The leadership ethical behavior was considered among the good manners that every
leader should have. After the numerous ethical business scandals, for example, Enron,
researchers started to separate the concept of ethical leadership from the other leadership styles
that used to be considered in the leadership theories. According to Brown et al. (2005), as cited
in Liu & Ren (2017), the ethical leader should be a moral person who expresses honesty and his
followers trust him. He should be accountable, directs his followers in the ethical dimensions,
sets the ethical standards and communicates in an ethical way. They also argue that the ethical
behavior could be classified into three components, the individual traits, the establishment of
ethical conduct and interpersonal relationship. Although, Liu & Ren (2017), argue that the
leadership role in the organization should be a combination of these three concepts. The ethical
leaders can make a positive impact on their organizations in terms of justice.
The ethical leadership theory mainly aims to achieve greater benefits through identifying
the appropriate intent for achieving the organizational goals. It assumes that ethical leaders
demonstrate high levels of emotional intelligence, respect the law, consider the public interest
and maintains the professional standards (Roman, 2017).
The ethical leaders are described with some characteristics, including honesty, empathy,
altruism, fairness, empowerment and justice. These traits lead the followers to trust in their
leader as their actions reveal faith, trust and confidence. Also, they influence the followers to
follow the leaders' directions as they trust that he acts according to their best interest. It is
assumed to lead to goals achievement and high performance of the teams and the organization as
a whole (Copeland, 2015).

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The ethical leadership and follower theory that describes the relationship between ethical
and unethical attitude has gained an increasing importance. Although, some researchers argue
that this theory evokes an unethical behavior from the followers, but others as, Kalshoven et al.
(2011), Detert et al. (2007) and Mayer et al. (2012), argue that ethical leadership is negatively
associated with the followers' unethical behavior.
Regarding the ethical characteristics of the leadership and based on the assumptions of
the social learning theory, there is no described way that the ethical leader should follow. Each
leader follows a certain way to influence his followers. The transactional leader uses effective
communication and rewarding system to influence followers. It also results in a low engagement
level of the followers in the socially disruptive behavior. According to Umphress et al. (2010),
the unethical pro-organizational behavior (UPB) concerns with two main concepts; the first is
that UPB acts in a morally unacceptable way by the society. The second is that this concept is
not formally described within organizations. UPB also considers that increasing the moral
awareness through social learning of the followers does not guarantee an improved moral
conduct of the followers (Kalshoven, Dijk, & Boon, 2016).
Second: Organisational values that support ethical decision making and ethical leadership
The ethical leadership increases the degree of employee engagement. The leader who
treats the employees in a respected and fair manner, leads them to consider their relationships
with their leaders as a social exchange process. The employees are more encouraged to make
more effort to achieve the organizational goals. This also leads to the delegation of the authority
and the employees to make decisions and act freely without the need of referring the leader's
judgement all the time. The ethical leaders empower the employees through continuous learning,
training and support. The open communication between the ethical leaders and employees

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clarifies the organizational goals and the expected efforts of the followers. Employees become
more job dedicated when they deal with ethical leadership (Engelbrecht, Heine, & Mahembe,
2017).
The self-development of the strategic leader theory assumes that there should be certain
principles to control the process of decision-making. These principles include the way of acting
while doing an activity and how to always develop and build his capacity (Sinha, 2017). The
ethical leaders are able to give the right and supportive guidance to their followers about how to
deal with problems, select the best alternative and take the right decision in the workplace. They
provide guidance that helps the employee to overcome obstacles and make better performance
(Peng & Lin, 2017).
The decision-making process requires to balance between the stakeholders' needs.
Information sharing within and outside the organization is essential. The decision making is
highly influenced by the leader cognitive pattern. The core values of the leader guide the
decision he takes. The decisions made in hard times are considered at the top rank that reflects
the leaders' values and beliefs (Mitchell, 2012).
The participatory leadership that was represented by Drucker assumes that the leaders
believe that employees are self-motivated to perform their job tasks. The participative leadership
involves information sharing and engaging the employees in the process of decision making. The
leader is the responsible person as he reflects the managerial action. Accordingly, the good
decision does not emerge accidentally, it has to be well prepared and reveals the collective
efforts of the leader and the followers. It reflects the wise and ethical behavior of the teamwork.
The good decision making requires good techniques. According to Gaissmaier (2011) and Moss
(2011), as cited in Emery (2016) there are certain principles that should be considered in making

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good ethical decisions, they are represented in, determining priorities, setting time, gathering
data, decision alignment with goals and ethics, balancing between decisions and follow up.
Third: The implications of social and public pressure for ethical behavior in organizations
The economic crisis has resulted in the development of the sustainable leadership theory. This
theory requires a long-term perspective when making decisions. It aims at developing the
employees' capabilities to become more skilled and engaged to work activities. The sustainable
leadership practices resulted in an increased customer value, lower costs and better performance
(Gerard, McMillan, & D’Annunzio-Green, 2017).
According to Organ (1988), as cited Gao & He (2017), the employee behavior might not
be recognized explicitly by the system of formal reward but contributes to the overall efficient
and effective organizational performance. The corporate social responsibility (CSR) is likely to
enable the employees to build a favorable ethical behavior, for example, the self-esteem. CSR is
also considered to contribute to increasing the ethical leadership behavior. CSR is a decided and
implemented by the top management in the organization, it controls the leadership behavior to be
ethical. The leaders are supposed to act within the will of the top management represented in the
CSR. Also, they are likely to be promoted for their ethical attitude. This means that the CSR
developed and promoted by the top management influences the ethical leadership behavior of the
middle and low-level management.
According to Ramamoorthy and Flood (2002), as cited in Gao & He (2017), the CSR
accompanied with the moral aspects influence the leaders and the employees' attitudes towards
the ethical behavior that are enacted with the organizational policies.
The CSR and ethical leadership are supposed to improve the relationship with all of the
organizational stakeholders, not only the employees. They disseminate the organizational values

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that increase the engagement of the stakeholders and decrease the employee turnover. The
reduction of the turnover rate is accompanied by the level of work engagement to the workplace
(Lin & Liu, 2017).
Fourth: Promoting the organization's corporate responsibility through values internally and to
stakeholders
Organizations should recognize the various interests of their stakeholders to be able to
maintain a sustainable relationship with them. Sustainability is likely to affect the organizational
long-term performance. The sustainability of the organizational performance could be achieved
when its employees are engaged, work in a healthy environment, treated fairly, empowered and
motivated. The internal organization should encourage the effective and ethical leadership.
The theoretical model that argues that the relationship between the leaders and
stakeholders depends on the exchange is highly considered in today's organizations. It focuses on
the mechanic relationship between the two parties. Researchers as Ewen et al. (2013), as cited in
Gerard, McMillan, & D’Annunzio-Green, (2017), argue that the social aspects should be
considered in the relationship between the organizations and their stakeholders. They assume
that the social aspects have the greatest impact on the relationship. They consider the social
elements not only the outcomes of the relationship.
The effective leadership main principle is to treat the stakeholders as partners. It involves
being highly trusted, committed and dedicated to achieving considerable results within the
organizational CSR. Robert Quinn, as cited in Caldwell & Anderson (2017), argues that leaders
should recognize their shortages to be able to make decisions based on ethical consideration. He
also assumes that leadership is about the moral power. It requires the leaders have long-term
vision and rise above the individual interest and consider the collective interests. In addition, he

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assumes that great leaders are those who strive to achieve the outcomes that have social benefits
and seek the opportunities to empower employees in order to discover their best skills.
The ethical leaders are challenged with communicating bad news with the stakeholders.
Decision makers should communicate the bad news in an ethical way that minimizes their
negative impact on the stakeholders. They should expect the potential response and negative
feedback from the stakeholders and manage to avoid any problems. They should also be
prepared with a plan that best serves the stakeholders and keeps the organization acting
according to its ethical basis (Caldwell & Anderson, 2017).
Conclusions
The ethical leader should be a moral person who expresses honesty and his followers
trust him. He should be accountable, directs his followers in the ethical dimensions, sets the
ethical standards and communicates in an ethical way. These traits lead the followers to trust in
their leader as their actions reveal faith, trust and confidence.
The ethical leadership increases the degree of employee engagement. The leader who
treats the employees in a respected and fair manner, leads them to consider their relationships
with their leaders as a social exchange process.
The open communication between the ethical leaders and employees clarifies the
organizational goals and the expected efforts of the followers. The good decision does not
emerge accidentally, it has to be well prepared and reveals the collective efforts of the leader and
the followers. It reflects the wise and ethical behavior of the teamwork. The good decision
making requires good techniques.

11Ethical leadership behavior and effective decision making
CSR is a decision made by the top management in the organization, it controls the
leadership behavior to be ethical. The leaders are supposed to act within the will of the top
management that is represented in the CSR. The CSR and ethical leadership are supposed to
improve the relationship with all of the organizational stakeholders, not only the employees.
Decision makers should communicate the bad news in an ethical way that minimizes their
negative impact on the stakeholders.

12Ethical leadership behavior and effective decision making
References
Caldwell, C., & Anderson, V. (2017). Ethical leadership in troubled times. International Journal
of Public Leadership, 13(2), 54-58.
Copeland, M. (2015). The importance of ethics and ethical leadership in the accounting
profession. In Research on Professional Responsibility and Ethics in Accounting (pp. 61-
98). UK: Emerald Group Publishing Limited.
Emery, E. (2016). Ethical behavior, leadership, and decision making. USA: Walden University.
Engelbrecht, A., Heine, G., & Mahembe, B. (2017). Integrity, ethical leadership, trust and work
engagement. Leadership & Organization Development Journal, 38(3), 368-379.
Gao, Y., & He, W. (2017). Corporate social responsibility and employee organizational
citizenship behavior: The pivotal roles of ethical leadership and organizational justice.
Management Decision, 55(2), 294-309.
Gerard, L., McMillan, L., & D’Annunzio-Green, N. (2017). Conceptualising sustainable
leadership. Industrial and Commercial Training, 49(3), 116-126.
Kalshoven, K., Dijk, H., & Boon, C. (2016). Why and when does ethical leadership evoke
unethical follower behavior? Journal of Managerial Psychology, 31(2), 500-515.
Lin, C., & Liu, M. (2017). Examining the effects of corporate social responsibility and ethical
leadership on turnover intention. Personnel Review, 46(3), 526-550.
Liu, G., & Ren, H. (2017). Ethical team leadership and trainee auditors’ likelihood of reporting
client’s. Journal of Financial Crime, 24(1), 157-175.

13Ethical leadership behavior and effective decision making
Mitchell, R. (2012). Doing the right thing: Ethical leadership and decision making. In New
directions for community colleges (pp. Wiley Periodicals, Inc.). USA.
Peng, J., & Lin, J. (2017). Mediators of ethical leadership and group performance outcomes.
Journal of Managerial Psychology, 32(7), 484-496.
Roman, A. (2017). Assessing the capacity for public value creation within leadership theories:
Raising the argument. International Journal of Organization Theory and Behavior, 20(4),
479-518.
Sinha, S. (2017). Aspire to build an ethical and sustainable organization? Renew thyself!
Strategic Direction, 33(1), 7-9.