Ethical leadership is a critical component of an ethical organizational environment. The systems must be in place to establish a culture of responsibility, accountability, and trust but that matters little if top management does not walk the talk of ethics. For example, a CEO who acts solely in her best interest is more likely to make decisions that compromise ethical values such as honesty and integrity while one who acts on those values strives to do the right thing regardless of the consequences to oneself or the organization.
Ethical leaders are transparent; they know what decisions have to be made and why. Transparency is a virtue that lies between two extremes: one of secrecy and the other, disclosing everything even if stakeholders do not have a right to know. Transparency produces trust. It enables followers to rely on the information provided for their own decision-making needs.
There are a variety of definitions of ethical leaders. Brown et al. define it as “the demonstration of normatively appropriate conduct through personal actions and interpersonal relationships, and the promotion of such conduct to followers through two-way communication, reinforcement, and decision-making.” This definition emphasizes the need to influence others in the organization to act responsibly. Ethical leaders demonstrate good values through their words and actions. Ethical leadership is about influencing those in an organization to do the right thing; make the ethical choice.