Ethical and Unethical Leadership Issues Cases and Dilemmas With Case Studies PDF
Ethical and Unethical Leadership Issues Cases and Dilemmas With Case Studies PDF
Ethical and Unethical Leadership Issues Cases and Dilemmas With Case Studies PDF
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Ethical and unethical leadership issues, cases, and dilemmas with case studies
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1. Introduction
The development of ethical theory dates back to Plato (427–347 B.C) and Aristotle (384–322
B.C.). Ethics as a word has its roots in the Greek word ethos, which translates to “customs,”
“conduct,” or “character.” Ethics has to do with the values and morals that individual or
society as a whole finds suitable, fair or appropriate. He adds that, ethics is concerned with
the virtuousness of individuals and their motives. Ethical theory gives a system of rules or
principles that guide individuals in making decisions about what is right or wrong and good
or bad in a particular prevailing situation they find themselves in (Northouse, 2016) [8].
Therefore being ethical is about being morally decent human and therefore respectful beings.
1.1.2 Law and Ethics: Being ethical is not just following the law. This is because whereas
the law quite often incorporates ethical standards hence most citizens would subscribe to it, it
Correspondence
Moses JB Kabeyi
can deviate from what is ethical. What society takes as standard of behavior can deviate from
Lecturer, University of ethical standards. A good example is Germany during the Nazi rule where atrocities by the
Nairobi, Kenya regime were unethical but still accepted by Germans (Williams, nd),
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I can therefore argue that being ethical should not be about ii. Honesty and willingness to comply with the law of the
doing what society accepts instead should be measured on a land and ethical standards
scale of its own because society can accept what is unethical iii. Concern and respect for autonomy of others any while
depending on varying circumstances. dealing with others.
iv. Benevolence and preventing harm to any creature
1.1.3 Values and Morality: Personal values are the
conception or construction of what individuals or society There are various reasons that compel people to behave
consider as desirable or acceptable. Personal ethics on the ethically. Fernando (2012) [5] identify what self-motivates
other hand is application of this values. Personal ethics is people to act ethically as;
also called morality. Morality in general refers to what i. It is natural for people to ensure that their actions do not
society tries to instill in children as they grow up (Fernando, cause and injury to others people.
2012; Northouse, 2016) [5, 8]. ii. Social and material wellbeing depends on one’s ethical
behavior in society.
2. Ethical Leadership iii. People are obliged to obey the laws of the land since
In as far as leadership is concerned, ethics is concerned with most laws are in line with ethical standards
what leaders do and who leaders are in terms of the nature iv. Many people want to keep good conscience and so
of leaders’ behavior, and with their virtuousness. When would want to be good members of society.
making leadership decisions, ethical issues are involved
implicitly or explicitly. The choices leaders make and how Therefore there exists natural motivation for people to act
they respond in a given circumstance are informed and morally and ethically but circumstances force them to think
directed by their ethics and are also influenced by their otherwise subjecting them to ethical dilemmas.
moral development.
2.3 Benefits of ethical leadership
2.1 Ethical leadership training and development According to Bass (1990) [2], a firm that is fully permeated
Ethical leadership is defined as use of normatively with transformational leadership from top to bottom
appropriate conduct through use of personal actions and conveys to its own personnel as well as to shareholders and
interpersonal relationships and the promoting the same to stakeholders and the community at large that it is focused
followers through the leader’s followers. This is enforced by and confident which is necessary for a stable, growing
use of tools like two way communication, reinforcement and company both in short term and long term basis.
decision making within the organization. According to On his part suggested seven benefits for a manager to focus
Brown, Trevino & Harrison (2005) [5], leaders are supposed on being an ethical leader. They include; Improved public
to be a key source of ethical guidance for employees image of the organization, restoration or enhancement of
because most employees look outside themselves for ethical investor confidence, prevention and reduction of criminal
guidance and therefore leaders should be the source of these related penalties and fines,
needed guidance. This definition suggests that it is not preventing lawsuits by employees who could not have their
enough for a leader to practice what is seen as ethical, he grievances resolved within the company systems, Improved
must ensure that the followers do the same within the employee retention and satisfaction hence productivity,
organization through his influential position by way of his market orientation and leadership through improved
actions, and communication. Brown, Trevino & Harrison customer care and satisfaction and setting the example for
(2005) [5] propose role modelling as a way of developing others in the market to benchmark hence raising the profile
ethical leadership. In this approach hired workers should of the organization or institution.
have proximate ethical role models at workplace to enhance
development of ethical leadership. This can also be done 2.3.1 Why businesses and individuals should act ethically
through training interventions by the role models as well as According to Prentice (2014) [9], people behave or want to
other types of training since they have been shown to be behave ethically for different reasons. Some don’t want to
successful in developing transformational leaders. To be arrested, some don’t want to be embarrassed, some, some
reinforce the need for trainee mentoring and training Bass don’t want to be jailed, some don’t want to be fired, and
(1990) [2] advises that a management trainee's first some don’t want to embarrass family. He notes that ethical
supervisor can make a big difference in his or her future actions breed trust and trust is key to economic growth and
career success. In his advice on ethical training and this is because by acting ethically, one contributes to social
development Prentice (2014) [9] observes that sharpening capital which makes economies and societies flourish.
ones moral reasoning and reinforcing character are Doing good makes one feel good and therefore acting
necessary courses of action to take to help leaders who wish ethically is a long term strategy for personal as well as
to be better people and also those who wish to train others organizational success.
on ethical leadership. For several reasons organizations are expected to conduct
their affairs ethically. Fernando (2012) [5] lists some of the
2.2 Principles of ethical leadership reasons as for acting ethically as;
Although not inclusive, these principles provide a i. To build trust with key stakeholders and shareholders of
foundation for the development of Sound ethical leadership: the organization like customers, partners and even
respect, service, justice, honesty, and community (Brown, financiers.
Trevino & Harrison, 2005) [5]. Fernando (2012) [5] identifies ii. To protect businesses from abuse by unethical
a number of principles of ethical leadership. They include employees and competitors
i. Fairness and ability to refrain from taking undue
advantage of others
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iii. To protect their own employees from liabilities and iii. Using scarce and unreplaceable industrial resources and
unintended consequences like litigation from third raw materials
parties iv. Overworking women and children and even
iv. To build and protect the reputation of the business and underpaying them
organization. v. Shift location of business, factory or activities at the
v. To meet the expectation of stakeholders. This is cost of society.
because many stakeholders expect them to operate
ethically and nothing less. For long term success Prentice (2014) [9] ungues that the
vi. By acting ethically, organizations create an operating reasons for unethical conduct are quite often selfish rather
environment in which they act consistently and in a than noble, short term oriented rather than long term
predictable manner. oriented, shallow and rather than thoughtful and overall
unethical conduct is not attractive and therefore is repellent
3. Unethical Conduct to many people in society. This means that although
The destruction or near destruction of the followers’ self- unethical actions my look attractive or gainful initially, the
esteem for the benefit of the leader makes transactional long term effects are undesirable.
leadership highly unacceptable to the dignity of people and
can therefore be taken as unethical social conduct. Some 4. Ethical Dilemmas
researchers like (Bass, 1985) [1] propose that According to, Fernando (2012) [5], an ethical dilemma is a
transformational and charismatic leaders can be unethical if moral situation in which a choice has to be made between
they are motivated personal interests rather than altruism two equally undesirable alternatives and they arise due to a
(Bass, 1998; Howell & Avolio, 1992) [3, 6], and if they use number of reasons, attitude, behavior, failure of personal
their authority in a selfish manner or inappropriately. character, conflict of personal values and organizational
Ethical leaders will normally influence ethics-related goals versus social goals. A business dilemma exists when
conduct to followers through actions like employee an organization decision maker faces a choice between two
decision-making and pro-social and counterproductive or more options that will have various consequences on
behaviors primarily through modeling and learning profitability, competitiveness ad stakeholders in general.
processes. Also, ethical leaders influence employee behavior There are occasions in life and in business practice that we
because employees view their relationships with ethical encounter dilemmas. They include fights in court where
leaders in terms of social exchange. Leadership ethics manufacturers and sellers try to distort facts, buyers
should be about honesty, integrity, fairness, following rules colluding with sellers to avoid paying taxes to state.
and laws, and being true to your values. Ethical dilemmas involve making decisions where rules a
vague or in conflict while the outcome of an ethical decision
3.1 Unethical Conducts/actions cannot be predicted with any degree of accuracy or
The rise of competitiveness in business and desire of precision so the leader or decision maker is often not sure
becoming successful by any means necessary have driven whether a decision made is right or wrong and quite often
many people to resort to unethical business practices. Indeed mistakes are made (Fernando, 2012) [5]. In making an ethical
some businessmen take it that in business there is no let go decision, an individual’s intentions and the factors
making even the highly qualified and well-educated and prompting him or her are the last considerations. The
trained individuals to engage in unethical practices so as to decision maker usually feels guilty when the intentions and
survive in the market place (Zińczuk, Cichorzewska & final decisions are at variance with one another.
Barczewski 2013) [12]. They identified factors contributing to Most ethical decisions are made in organizational
unethical conduct as: dominating culture in an organization environment with different value systems, competitive
which supports the unethical acts; lack of trust within the pressures, political ideologies, moral philosophies and
business, lack of supporting values or failure to comply, culture all of which provide opportunities for misconduct.
weak legal and organizational policies procedures and As a result, of this moral and ethical issues are common in
guideline; Inappropriate role modelling by organizational business (Fernando, 2012) [5]. In a year 2000 survey by
leadership; setting unrealistic and unattainable operational KPMG on 24,000 workers from different companies, 74%
targets. In his research on behavioral ethics and why people revealed that they had observed violations of law or
act or behave unethically, Prentice (2014) [9] demonstrated company policy and standards the previous year with 50%
that even people of good character, even if they are skilled indicating that they observed what they considered as
at moral reasoning, may engage in unethical conduct due serious misconduct which could lead to financial losses.
psychological shortcomings, social pressures, organizational Employees who work for companies with comprehensive
stresses, and prevailing situational factors. ethics and compliance systems reported more favorable
Organizations and individuals engage in various forms of results than those employees who work in companies
unethical conduct some of which are identified by Fernando without such programs (KPMG, 2000) [7]. This confirms the
(2012) [5] as; high level of ethical issues in most organizations which can
i. Price fixing usually done by monopolies who at times be reduced by enforcement of ethical monitoring and control
create artificial scarcity and other actions to influence policies by organizations.
upward price movement.
ii. Discriminatory wage structure in organizations which 4.1. Why Corporates and individuals Face Ethical
comes in various forms like having different pay Dilemmas
structures for same tasks and qualifications based on Many reasons contribute to ethical dilemmas in
race, gender and nationality. organizations. According to Fernando (2012) [5] corporates
are faced with ethical dilemmas daily because investing in
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International Journal of Applied Research
ethical practices and being fair to all stakeholders will cost 4.3.4 Obedience of authority: Many individuals have a
dearly. Several dilemma causing ethical problems include; strong motive to please the authority and even disregard
i. There is no clear linkage between business ethics and their ethical standards in order to please the authority. This
financial success by organizations with several cases of is also an opportunity for authority to show leadership in
thriving and successful unethical organizations and ethical issues through role modelling.
individuals.
ii. It is not possible to clearly establish the correct balance 4.3.4 Overconfidence: People generally believe that they
between business ethics and investments required for are more ethical than others and tend to be comfortable with
the same. their moral character. This overconfidence often leads them
iii. Ethical investments have got very long gestation to make decisions without proper ethical reflection
periods and so it takes very long to realize the benefits increasing changes of making unethical decisions.
of once ethical investments and conduct. Framing: This involves making issues look different from
iv. It is often not clear on exactly how much one is what they really are for example making a pure technical
required to invest in business ethics to be considered issue look like mere business issues. As a result, people
fair or acceptable, a leeway that is a potential cause of change decision framework creating opportunity to make
dilemma. unethical decisions to suit the new outlook. A good example
is that of collapsed Enron where many unethical decisions
4.2 Sources of Ethical Problems and Dilemmas in were made as the company linked so many issues with the
Organizations stock market price and not moral and ethical contents.
Ethical problems or challenges in business take different Therefore if leaders don’t consciously consider ethical
forms and cause different kinds and levels of ethical dimensions in decision making frames, they make different
dilemmas. As Fernando (2012) [5] posits, ethical challenges and less ethical decisions than they should have done.
and related dilemmas are a result of; Loss aversion: The fact that people dislike losses more than
i. Failure of individuals personal character that leads him they enjoy gains of equal size make them willing to make
engage in unethical conduct riskier and even less ethical decisions to avoid losses so as
ii. Organizational goals and social values which are not to secure an equivalent gain.
firm or strict on ethical conduct
iii. Hazardous but very profitable products which motivates Incrementalism: Quite often, people make business
many to engage in unethical practices mistakes and then unable to admit to them, start making
iv. Conflict of personal values and organizational goals. larger and larger ethical mistakes as a consequence. Prentice
(2014) [9] emphasizes that people loose ethical footing step
Organizations also face ethical related problems when they by step and not abruptly.
go international or become multinational and encounter new
technology, religions, cultural and social beliefs as well as Self-serving bias: This refers to the tendency by
different economic and political systems and ideologies management or leadership to attribute to themselves more
which definitely will introduce ethical problems and skills, intelligence or contribution to successful outcomes
dilemmas. Because of the diversity of the problems and than is objectively justified. In confirmation type of bias,
dilemmas, organizations should be aware of the ethical evidence is sought and interpreted in a way that validates
dimensions and think as well as operate ethically. Ethical existing beliefs, expectations or hypothesis at hand. Such
considerations should be incorporated in the operations of self-bias can lead to justification of unethical actions and
the organizations and employees should be prepared to think create an environment that encourages unethical practices.
and work ethically.
4.4 How Corporates Can Observe Ethics to Reduce
4.3 Causes of unethical practices Dilemma
In most cases, companies resort to unethical practices due to Organizations must put in place various measures to reduce
intensive competition and excessive Focus on economic ethical dilemma which is undesirable but will always be
goals of making profits (Fernando, 2012) [5]. In his view encountered in daily business activities. Fernando proposes
Prentice (2014) [9] identifies a number of factors that a number of measures which include;
contribute to unethical conducts. These factors or causes i. Implementation of ethical activities and behavior by
are: developing in-house codes of ethics that is expected to
be adhered to by the organization and its stakeholders.
4.3.1 Environmental factors: The operating environment ii. Performance reviews or appraisals should include ethics
can facilitate ethical or unethical behavior without even as an element of review sending a clear message to the
realizing the difference. workers on their ethical requirements.
iii. Continuously review ethical behavior by employees and
4.3.2 Time pressure: When people work under pressure of the organization with the objective of improving on
time, they are in a hurry to achieve and often are less likely continuous basis.
to act ethically whenever an opportunity to act presents. It is iv. Carry out regular ethics audit for the organization and
about quick results and quite often this is irrationally done. implement any recommendations based on findings of
the ethical audits audit.
4.3.3 Lack of transparency: People always work ethically
when they are being observed and less ethically when 4.4.1 Code of personal ethics
working secretly or behind cameras. Developing and implementing a code of ethics for
employees can be used as a tool for controlling ethical
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International Journal of Applied Research
conduct of employees. Starrett (2011) explained that a code it avoid coercion, deception, manipulation? The
of ethics provides some fundamental aspects of professional deontological approach is somehow inflexible (Fernando,
conduct and is central to advising individuals on how to 2012) [5].
conduct themselves, judge themselves, and understand their Teleological: This approach to ethical dilemma is assumes a
undertakings. Fernando (2012) [5] and Starrett lists examples layman’s and common sense approach in which the moral
of code of ethics as: character of actors depends on a simple, practical measure
i. Maintenance of high standard of professional of extend to which action actually help or hurt people.
responsibility Actions that produce more benefits than harm are right and
ii. Avoid situations of conflict of interest and suppress those that don’t are wrong (Fernando, 2012) [5].
personal interests for general good of the organization In his recommendations, Fernando (2012) [5] suggests while
and society. deontological and teleological approaches to ethical issues
iii. Always act and work with integrity in all situations you seem to contradict each other in theory, in actual practice
find yourself in. they complement one another. Therefore in the process of
iv. Never discriminate against people for whatever reasons identifying practical solutions to ethical dilemmas, we
v. Maintain professional relationship based on mutual should not ignore any of them. We should there consider the
respect for individuals and organizations. face value in terms of whether an issue is right or wrong and
vi. Never give up on your personal professional ethics for also consider the value in terms of effective benefits and
anything less than its requirements. harm to arrive at an appropriate decision.
vii. Respect and uphold confidential information to which
you have access during your work or professional 5. Ethical Case Studies
practice. 5.1 Case Scenario 1
viii. Be always committed to your personal professional John works in the accounting department of a large firm.
ethics for whatever reasons. While going over the books for the past several months,
ix. Be honest and impartial in all your undertakings with James notices that someone has altered the figures to
third parties increase earnings by several thousands of dollars. He
suspects that the errors, which are in the company’s favor,
4.4.2 How to create an ethical environment are too consistent to have been honest mistakes. He knows
An organization built an ethical environment by undertaking that he should report his findings through the company’s
the following as suggested by Fernando (2012) [5]; ethics hotline. However, he worries that doing so will
i. Encourage open communication between employees, jeopardize his job security and reputation with the company.
managers and stakeholder
ii. Articulate organizational values in all undertakings with 5.1.1 Case Analysis: The fact that the company provides an
employees ethics hotline is sufficient evidence that the organization
iii. Employees should be trained and sensitized on ethical supports ethical conduct by its employees and that unethical
behavior and conduct conducts need to be reported. By failing to report this case,
iv. Leaders should assume the responsibility of installing John is already part of the unethical conduct as he has
ethical behavior. indeed gone against the company policy. He fails to report
v. Make organizational decisions to be committed to because he feels that by reporting he will jeopardize his job
ethical conduct right from the top to the bottom of the security. This suggests that the leadership has not been
organizational structure. consistent on ethical decisions, has been a partaker in ethical
vi. Leaders should recognize that they are role models by misconduct or has simply failed to clearly show workers the
definition, actions, and by their values. direction they should take on ethical issues. John is also
selfish because he is putting his interests first. He is being
It is necessary for organizations to put in place and enforce teleological in his analysis and handling of the ethical
ethical standards so that workers have very little doubts as to dilemma because he disregards the fact that he has come
what to do when faced with ethical dilemma and what their across a significant unethical issue just to protect himself
organizations stand for which calls for consistency when (Fernando, 2012; Northouse, 2016) [5, 8].
handling ethical problems (Fernando, 2012) [5]. John demonstrates lack of personal values and ethics which
demands that he acts with integrity and uphold professional
4.4.3 How to resolve ethical issues ethics (Fernando, 2012) [5]. It also shows that unethical
Fernando (2012) [5] suggests that to resolve an ethical issues thrive in this organization and by reporting it will
question that creates dilemma, one should consider three alert the organization which definitely will take action since
things, namely; Utility; whether the benefits exceed costs. it has structures in place to report unethical issues. The
Right; whether it respects or affects human rights and organization should be consistent in handling ethical issues
finally, Justice; whether it distributes benefits and burdens so that workers like James don’t fear for their jobs. The fact
evenly. He identifies two basic approaches in resolving that John works in accounting raises questions about his
ethical dilemmas namely deontological and teleological. integrity as an accountant because accounting is a profession
Deontological: This approach is action oriented and guided by personal professional ethics (Starrett, 2011;
according to this approach an ethical standard is consistent Fernando, 2012) [5]. The organization should enlighten its
with the fact that it is performed by a rational and free employees about their personal professional ethics and
person. When this approach is followed in analyzing an develop a code of conduct for all employees. While making
ethical dilemma, a narrow focus is targeted. Questions to be its position on unethical issues clear through consistent
answered include which actions are inherently good? Does it ethical decisions and role modeling (Fernando, 2012) [5].
respect the basic human rights of everyone involved? Does
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International Journal of Applied Research
Ethics-of-Charismatic-Leadership-Submission-or-
Liberation
7. KPMG. KPMG Forensic Integrity Survey, 2000.
Retrieved from
https://www.bentley.edu/files/2015/04/24/KPMG%20F
orensic%20Integrity%20Survey.pdf
8. Northouse PG. Leadership: Theory and practice (7th
ed.). Thousand Oaks, CA: Sage, 2016.
9. Prentice R. Teaching behavioral ethics. Journal of Legal
Studies Education. 2014; 31(2):325-365.
10. Starrett S. Examples from Create Your Own Code of
Ethics Assignment, 2011.
https://nationalethicscenter.org/resources/308/download
/Starrett_codeofethicsassignment
11. Williams WR. (nd). Ethics and Law: Basic Concepts,
Cases, and Dilemmas. Retried from
https://www.baruch.cuny.edu/facultyhandbook/docume
nts/EthicsandLaw.doc
12. Zińczuk B, Cichorzewska M, Barczewski M. The
analysis of unethical behavior among Employees in
enterprises – A pilot study in the automotive industry,
2013. http://www.toknowpress.net/ISBN/978-961-
6914-02-4/papers/ML13-249.pdf
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