Ethical Leadership Framework

Ethical leadership requires more than values. Values such as care, justice, integrity and respect are the raw material of ethical leadership, but they require a production process to convert them into effective actions in complex and dynamic situations. 

Background

A small number of people in society have a very significant opportunity to influence the lives of others. This group could include the CEO of a mining company; Executive Officer of a Not For Profit/ Social Venture; the Chair of a Lands Rights Council; an Executive Partner of a Law Firm; the Headmaster of a High School; the Bishop of a Diocese; or a senior police officer. They engage and influence others as role-models, decision makers and communicators. They have extensive, lasting impacts through the organizations, cultures, systems and procedures they create and lead. Australia’s response to the great collective challenges of our times will be guided and shaped, for better or worse, by the actions of these people.

We desperately need outstandingly able and well-placed people - the people who shape our society - to be ethical and to use their influence wisely and well. Now, more than ever, our society – our world – has an urgent need for ethical leadership. There is an increasing gap between the wealthy and those in poverty. Problems of crime, drugs and homelessness persist, despite government efforts. Environmental challenges seem too complex for many to understand; indigenous issues and political problems in near neighbours seem intractable.

Within organizations, the media frequently uncovers examples of unethical behaviour, often with dire consequences for customers, shareholders, staff and others. Senior leaders often lose their reputations and their jobs for unethical practices that they were unaware of until the crises hit. Many of the people involved in these incidents are ethical in their personal lives. What happens? According to Edward Freeman, the Academic Director of the Business Roundtable Institute for Corporate Ethics at the University of Virginia, “Many executives and business thinkers believe that ethical leadership is simply a matter of leaders having good character, and making decisions about right and wrong, but the reality is far more complex.”

Research evidence and experience suggest many explanations besides a lack of moral character for ethical failures in organizations. For example;

  • people often are overwhelmed by the complexity of situations and commit to positions that later prove unethical. When confronted with their own failure to act ethically, they often rationalize their behaviour and create conditions that encourage escalation.
  • organizational and team cultures can either facilitate or inhibit unethical behaviour by individuals when following routines or conventions. The subtle effects on ethics go unnoticed until a crisis occurs.
  • compensation, budgeting and other systems often create moral hazards in which rewards, success and resources go to those who are willing to bend rules and act out of character.
  • if there is even the perception of a dent or tear in the ethics of a leader or an organization, they are run through the mud so that all their energy is focused on managing the crisis and not what is right.

Through research and conversations with executives over the last 25 years Freeman, like many others, has become convinced that the greatest impediment to developing ethical leadership is not a scarcity of executives possessing personal character, but rather the lack of a framework for understanding what it means to act as an ethical leader in modern society and organizations.

We propose a framework that outlines the values, personal characteristics and levels of skill required to be an effective ethical leader in modern society beginning with our definition of ethical leadership and how leadership is enacted. We then outline the knowledge and personal attributes that determine capacity for ethical action and the skill levels at which that capacity is realized. In our proposed framework, internal and external alignments of ethical values, which determine integrity and reliability, respectively, are the criteria for determining the effectiveness of ethical leadership.

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