Ethical Leadership

A google of “Ethical Leadership” showed 198 million results in 0.56 seconds. As globalisation takes place, the world is more connected by the Internet and news is easily shared on social media, amplified by accessible state-of-the-art recording devices including our smartphones. News could trigger a negative economic impact on companies and countries. For example, H&M informed that cotton in Xinjiang was produced unethically decided to stop purchasing from the region (Paton, 2021), backlash resulted in H&M being boycotted by the Chinese. The H&M leadership decided to take an ethical stance not to support forced labour, and it came with a financial implication on the China market.

Figure 1.1 6 Characteristics of ethical leadership (Resick, et al., 2006)

Figure 1.2 9 Characteristics of an ethical leader (O’Connell & Bligh, 2009)

Figure 1.3 4V Model of ethical leadership (Grace, et al., 1996)

How does ethics play a part in decision making and what are the characteristics of the decision maker? Bazerman (2020) in Harvard Business Review noted how ethics is beyond black and white rules, or telling us “not to lie, or cheat”. Figure 1.1 and Figure 1.2 support this view by expanding the characteristics of ethical leadership to six and nine attributes, respectively. These attributes can be summarised into the 4V model of ethical leadership in Figure 1.3, which lists the values that form the ethical decisions of a leader. Vision refers to the long-term considerations and implications of the decided action. Voice refers to the ability to share and educate others about the leader’s ethical beliefs. Virtue refers to the actions carried out in accordance with the ethical beliefs.Bazerman, in his article, talked about being behind the “veil of ignorance” and remove unnecessary information that may cause biasness, . For example, in a job application, removing gender and race, choosing the stronger candidate to interview based on skills and experience, will make for fair consideration.

Returning to the H&M incident, its Chief Executive Officer Helena Helmersson said “(they) stand by (their) responsible purchasing practices and agreements with suppliers, and are in close dialogue with them” in their sustainability report (H&M Group, 2021). She chose to carry out the values of character and integrity as a role model of ethical behaviour while leading the company, and made a tough decision not to support the unfair treatment of suppliers a tough decision was made in upholding the virtue as a role model of ethical behavior which have seen a negative impact on the business in China and having to lead an uphill task to regain consumer trust (Ng & Bermingham, 2021).  On the other hand, a similar case in 2010, Apple’s Foxconn incident (Sandoval, 2013) did not affect Apple’s iPhone sale and revenue continued to grow. This was attributed to a well-handled public relation (Greenfield, 2012) move where Tim Cook, who was considered the voice of ethics,  reiterated that improvements would be made to the working conditions. Learning from Tim Cook’s approach, H&M could have approached the issue carefully  before deciding on an action plan.

In his study, Yates (2011) concluded a correlation between ethical leadership and employee satisfaction, saying that positive attitudes and behaviours in job satisfaction and commitment are directly impacted by ethical leadership. This was supported by Bello (2012) in a similar study resulting in the same conclusion. In the current world, ethics might take a backseat when achieving business goals, which the papers and Bahren Shaari (2019), Chief Executive Officer of Bank of Singapore, have re-emphasised that it did not have to be the case. The Bank of Singapore’s long-term profits come from ethical leadership. Even though among scholars, the idea of ethical leadership differs (Yates, 2011), it is essential that individual or business entity defines what ethical leadership means to them and how it should be educated to their stakeholders.

Ethical leadership and decision making are determined by the amount of information provided, along with careful consideration of the long-term implications of the moral and ethical factors. These will affect the decision outcome, beyond the clear right and wrong or set of rules to follow. Bazerman (2020) started his article with the example of an autonomous vehicle. In the event of an accident, how should the vehicle react? Should the five pedestrians or the passenger in the vehicle be saved? What would be the ethical reaction for the vehicle on who to save?

Research into this topic has opened the mind to the factors to be considered on being an ethical leader in the business world – what would be the right choice or what would be the best choice for the business and the employees.

References

Bazerman, M. H., 2020. A New Model for Ethical Leadership. [Online]
Available at: https://hbr.org/2020/09/a-new-model-for-ethical-leadership
[Accessed 31 March 2021].

Bello, S. M., 2012. Impact of Ethical Leadership on Employee Job Performance. International Journal of Business and Social Science, 3(11), pp. 228-236.

Brown, M. E., Treviño, L. K. & Harrison, D. A., 2005. Ethical leadership: A social learning perspective for construct development and testing. Organizational Behavior and Human Decision Processes, 97(2), pp. 117-134.

Chen, X. & Ge, S., 2018. Social norms and female labor force participation in urban China. Journal of Comparative Economics, 46(4), pp. 966-987.

Grace, W., Ebbers, L. & Kell, D., 1996. Values, Vision, Voice, Virtue: The 4 “V” Model for Ethical Leadership Development.. The Olympics of Leadership: Overcoming Obstacles, Balancing Skills, Taking Risks.

Greenfield, R., 2012. How Apple Fixed Its Foxconn Problem. [Online]
Available at: https://www.theatlantic.com/technology/archive/2012/05/how-apple-fixed-its-foxconn-problem/328307/
[Accessed 31 March 2021].

H&M Group, 2021. Sustainability Performance Report, Stockholm: H&M Group.

Ng, T. & Bermingham, F., 2021. Hit by Xinjiang cotton backlash, H&M aims to ‘regain trust in China’. [Online]
Available at: https://www.scmp.com/news/china/diplomacy/article/3127767/hit-xinjiang-cotton-backlash-hm-aims-regain-trust-china
[Accessed 31 March 2021].

O’Connell, W. & Bligh, M., 2009. Emerging from Ethical Scandal: Can Corruption Really Have a Happy Ending?. Leadership, 5(2), pp. 213-235.

Paton, E., 2021. H&M Faces Boycott in China Over Stance on Treatment of Uyghurs. [Online]
Available at: https://www.nytimes.com/2021/03/24/business/handm-boycott-china-uyghurs.html
[Accessed 31 March 2021].

Resick, C. J., Hanges, P. J., Dickson, M. W. & Mitchelson, J. K., 2006. A Cross-Cultural Examination of the Endorsement of Ethical Leadership. Journal of Business Ethics, 63(4), pp. 345-359.

Sandoval, M., 2013. Foxconned Labour as the Dark Side of the Information Age: Working Conditions at Apple’s Contract Manufacturers in China.. TripleC, 11(2), pp. 318-347.

Shaari, B., 2019. My plan for long-term profit? Prioritising an ethical culture. [Online]
Available at: https://www.bankofsingapore.com/research/my-plan-for-long-term-profit-prioritising-an-ethical-culture.html
[Accessed 31 March 2021].

Yates, L., 2011. Exploring the relationship of ethical leadership with job satisfaction, organizational commitment, and organizational citizenship behavior. Doctor of Business Administration , Volume 5.

13 comments / Add your comment below

  1. Great blog! Really like the way you shared the stories in association with the various theories on the subject matter. It’s so true that there is much written on the subject itself! Thanks for the insights !!

  2. Thanks for sharing your extensive research on the various cases in your article! Especially the one on H&M vs Apple

  3. Wow…. you have shown us a detail breakdown on the 4Vs model and characteristics of ethical leadership. Agreed that being a leader, we need to have such good 6 key attributes.

  4. I like the way you present, and very impressive, but I am just wondering if you can give me an example in your own experience. Facing and unethical leader how do you persuade them not to act unethically?

  5. Wow, so impressive article!!! From your article, I’m having more ideas about ethical leadership and something beyond it. Thanks for sharing.

  6. It is not an easy decision for H&M. Imagine China with 520 outlets (top 2 market with most outlet) and top 5 revenue generating for H&M. Very interesting. Thanks for sharing.

  7. Excellent article! I like your blog structure to elaborate 4V Model of ethical leadership and given several similar case study. Thanks for your sharing.

  8. Now that’s what I call a great blog post writing, Sean!

    Content and visuals were so engaging as it was enlightening, but the H&M CEO Helena Helmersson example you revealed is quite remarkable.

    Your unique perceptiveness on what would be the right choice or what would be the best choice for the business/employees is spot on.

    Happy to read your next set of blogposts! 🙂

  9. A very good write up on different ethical leadership scenarios. Upholding the right ethical value is important to keep the company moving in a long term direction. Thanks for sharing

  10. Good example about H&M. Agreed with the key that ethical leadership and decision making are determined by the amount of information provided, along with careful consideration of the long-term implications of the moral and ethical factors. Thanks for sharing.

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