Cultivating Ethical Leadership in Business: A Guide to the UDallas College of Business

Ethical leadership is crucial because the term itself implies the existence of unethical leadership, highlighting the need for good leadership across various sectors like corporations, governments, and more. James McGregor Burns, in his book Leadership, distinguishes between mere 'power wielders,' who use their position selfishly, and true leaders, who aim to benefit others with their power, positively impacting individuals, teams, and communities.

Leadership is seen as an intentional influence within relational contexts and is not dependent on formal titles or positions. This view aligns with the foundational belief at the UDallas College of Business where we embed ethical considerations across all courses, shaping future leaders to think ethically in all decisions, which is any decision that impacts another person.

The core of ethical leadership involves using one's influence responsibly, and recognizing the moral obligations these influences entail. Trust, a cornerstone of all functional relationships, relies fundamentally on ethical behavior rooted in virtue ethics. Continuous self-examination and alignment of actions with ethical standards are vital, stressing the ongoing nature of ethical commitment in leadership.

Any decision that we make which impacts another individual is an ethical decision.

Ethics plays a pivotal role in business, transcending mere transactions. It's foundational for creating lasting relationships with customers, and encouraging repeat business and referrals, none of which happen if there's a perception of unethical behavior. 

Businesses are fundamentally about dealing with people — employees, customers, suppliers -— all of whom deserve to be treated with dignity and respect. Treating people ethically, and recognizing them as created in the image of God, mandates conducting business ethically. This perspective is vital, including in corporate America where despite stereotypes of greed and crony capitalism, many conduct their operations ethically and successfully.

Ethical business requires focusing beyond immediate profits, and considering long-term impacts on the environment and community. Ultimately, operating ethically is not just beneficial for referrals and business reputation; it holds intrinsic value beyond its instrumental worth.

Leaders face two primary ethical challenges in modern business: the pressure of short-term gains and the toxicity within workplace cultures. The emphasis on quarterly returns, driven by investor expectations, incentivizes leaders to prioritize short-term financial performance over long-term sustainability, posing a significant ethical dilemma. 

Beyond financial concerns, there's a more subtle, yet profound, ethical challenge related to interpersonal dynamics within organizations. The treatment of coworkers, employees, customers, and the overall culture can significantly impact the ethical landscape of a company. Toxic environments, characterized by abusive behavior and manipulation, not only affect individual well-being but also undermine the organization's ethical standing. 

Such toxic cultures are often perpetuated when leaders, even when achieving positive external metrics, allow negative behaviors to persist, prioritizing superficial success over genuine ethical practices.

Ethical challenges extend beyond the realm of financial performance to include the fundamental human aspects of how individuals are treated within business settings, emphasizing the need for ethical leadership and followership alike.

Ethical leadership is rooted in integrity, drawing from the concept that integrity aligns with being a whole, congruent person. To embody integrity, one's espoused values (what we claim to value) must align with enacted values (our actions). However, solely aligning our values and actions isn't enough. Ethical leadership also requires our values to be anchored in something beyond ourselves, like ethical principles or our faith, ensuring they serve a greater good rather than self-interest.

It's not sufficient to just profess integrity; we must continually confront our shortcomings, recognizing the gap between our ideals and our actions, a never-ending process demanding humility and a willingness to be questioned by others. This openness to scrutiny ensures growth, emphasizing the difference between self-promotion and genuine service to others. Ethical leadership necessitates humility, self-reflection, and the courage to admit and correct our failures, alongside the discipline to align our actions with broader, established moral standards.

The essence of ethical leadership begins at the top, where leaders establish a virtuous business model within an organization. They must model integrity, set clear policies, and define boundaries akin to bumper guards in bowling, indicating that certain business actions are off-limits if they fall outside ethical parameters. The leader's behavior not only sets the tone but also forms policies that prevent straying from ethical paths.

A critical aspect of ethical leadership is authentic accountability. All too often, leaders can handpick a compliant board, creating a bubble where true accountability is absent. Effective oversight is needed to detect and address issues. Without transparency and the possibility of external evaluation, ethical failures become more likely.

Authentic accountability means instituting leaders who are open to scrutiny, who do not fear hard questions, and who are willing to be challenged by those they govern.