How Will Ethical Issues Affect Leadership in a Business

Contemporary and Pervasive Issues How will wide issues affect get inership in a vexation? Word play 5671 In this essay I am expiry to discuss how estimable issues put up affect leadinghip in a fear. In run to answer this question the essay will start by poverty-strickenhanded a brief introduction into the 2 questions loss attractership and note ethics. I will hence aim to masteryfully link them by take uping the contr everyplacesy of whether attractors should concern themselves with honorable issues or whether making as more(prenominal) than coin as possible should be their main consid eontion.drawing cards has some distinguishable meanings and there bemuse been numerous different classification systems utilize to ready the dimensions of leadinghip. Inf bear as Stogdill (1974) pointed out, there ar almost as more different definitions of leadinghiphip as there ar spate who select tried to define it. One popular definition used for this e veryplacecome is that leadhip whitethorn be considered as the act upon (act) of influencing the activities of an organized class in its efforts toward cultivation setting and goal achievement(Stogdill, 1974).This definition suggests that it is non a characteristic besides is an event that calcu later(a)s place mingled with a leader and his or her following and that there atomic effect 18 three aspects to leadership. Firstly, it involves turn in that leaders induce their followers to be prolong in a certain way. The instant aspect is that leadership occurs in a multitude context and lastly that leadership includes attention to goals, which a leader must direct their followers to achieve. Over the years there have been some(prenominal) studies and theories moulded on leadership.The prototypical, which dominated until the late 1940s, was the Trait Approach, which focused on leaders and non followers. It assumed that leaders had certain traits, such as intelligence a nd integrity and that they argon born and non do. However, this admission failed to take situations into account and recent research has proven that traits l integrity(prenominal) when backwards tooth non account for effectiveness. following(a) this was the style approach, which focuses on what leaders do and how they act towards subordinates rather than characteristics. This era defines leadership styles as either Autocratic, democratic or laissez exquisitee.However, this approach fails to gamble which of these leadership styles is most effective in every situation. Following this was the situational and chance theories, which assume that different situations motive different types of leadership. However it assumes that people post learn to get effective leaders and does not adequately condone the link in the midst of styles and situation. The Situational theory relates four leadership styles Directing, Coaching, Supporting and delegating to followers readiness for them (Gill, 200648).However, the model assumes twain flexibility of style and the capacity to diagnose the situation and the style that is needed. In 1980s the newfangled leading approach was introduced, which agrees visionary, charismatic and transformational leadership theories. Transformational leadership occurs when leaders press peoples motif to act and create a reason of racyer purpose (Gill, 200636). likewise and published around the same time was the theory of Charismatic leadership, who act in unique ways that have specific charismatic net on their followers.This stage provides a broader view of leadership that augments early(a) models and places a strong emphasis on leaders needs, de terminal figureine and morals. However, due to the panoptic range that it covers it lacks conceptual clarity and it is difficult to define the parameters of transformational leadership (Northouse, 2004185). ultimately, in the late 1990s Post-charismatic and Post-transformation al theories emerged, which focuses on leadership as a association and two leaders and followers progress toing together. Leadership is a process that is similar to trouble in more ways and many of the functions of management be included in the definition of leadership.This was get byd by Yukl (1989), who verbalise when managers atomic number 18 intricate in influencing a group to envision its goals, they atomic number 18 affect in leadership. When leaders ar involved in planning, organizing, staffing and controlling, they re involved in management. Both processes involve influencing a group of individuals toward a goal attainment. Both management and leadership involve influence, working with people, meeting goals and many other similar functions. However, there is a distinct difference between leadership and management and the main functions of the two are quite dissimilar.It was argued by Kotter (1990) that the function of management is to provide magnitude and co nsistency to organizations, whereas the primary function of leadership is to produce change and movement. Whilst managers plan and budget, a leader creates a vision and sets strategies, instead of controlling and problem solving a leader motivates and inspires his followers. In admission to this, Bennis and Nanus (1985) made the distinction very clear, managers are people who do things right and leaders are people who do the right things. Although it argued that the two are very different it is for this reason that both are needed for an organization to be a success. Without management outcomes earth-closet be meaningless or misdirected and without leadership the outcome put up be stifling and bureaucratic. This was the opinion of Warner Burke (198668), who said that For clarity of goals and direction, managers need leaders. For ind swell uping assistant in r to each oneing goals, leaders need managers. A bring forward question that is often raised on the topic of leadership is whether leaders are born or made?Whilst some would argue that It is not a matter of whether leaders are born or made. They are born and made (Conger 2004), it is a topic that has caused great debate. Many would argue that leadership is innate (inborn) and that the character, style and competence needed to be a leader is in occurrence genetic and it arsenot be developed. However, others have argued that leadership is not eat up to genetics alone just that it john in detail be developed over a period of time done environment and experiences.This is the opinion argued by Winston (Winston 2003), who says that we are not merely the product of our genes environment has a Brobdingnagian impact but in a mysterious way. A encourage aspect to this question is whether leadership can be taught. There are many opinions on this matter but the tendency is towards agreeing that, while picayune if anything can be taught, it can be learnt with development, growth and answer (Gill, 200 6272). A chore operates according to the vision and determine of its leader. A leader has many roles within an organization, which can be pick out to its long-term success.The first of these is to provide an overall direction by defining and communicating a meaningful and attractive vision of the in store(predicate) and a mission through which the organization will pursue it (Gill, 200696). This direction which whitethorn stem a long way into the future will need to consider foes, changes in tastes and current standing in the market. In relation to this it is a leaders indebtedness to create a strong and positive organizational purification with its followers having shared vision and values, which can response in an effective organization.A further role of a leader is to develop, get commitment to and promise the successful implementation of strategies (Gill, 2006176). This is one of the most important roles for a leader and involves them planning where they want to be in t he future and how they are going to get there, for framework by acquisitions or moving into late geographic markets. Another role of a leader in crinkle is to present employees to be able to do what needs to be done. In instal to do this a leader must give them the k directledge, skills, authority and independence to manage themselves and be accountable for their behavior.If a leader successfully empowers his employs it can lead to both job satisf natural action and enhanced organizational functioning in many ways. Similarly it is an important role of a leader to influence, motivate and inspire employees to reach the companies goals. One of the key factors that will determines whether it is achieved or falters will be the ability of the leader in these three areas. Finally if an organization is to continue to prosper, people development must be high on a leaders agenda, by identifying the most talented people coming through and making sure that they are developed for major roles in the future.Ensuring that there is a continued stream of talent developed is a key factor in sustainable progress and achievement. An effective leader has the ability to successfully carry out all of these roles. The second topic that this essay involves is line of merchandise ethics, which has been described by some as a base on balls fashion which will come and go and can and so be safely ignored or dismissed (Vallance, 1995 4) However, business scandals of the late 1980s such as Guiness and Blue Arrow and the results of these have made businesses sensible of the importance of their spirit and the need to think seriously roughly honourable issues.There have been numerous definitions of ethics, which involves systemizing, defending and recommending concepts of right and legal injury behaviour and includes principles and values of what is fair or unfair and proper or improper. It has been argued that there is only one ethics, one set of rules of morality, one princi ple that of individual behaviour in which the same rules apply to everyone alike (Drucker 2007).A popular definitions is that moral philosophy deals with values, with good and harmful with right and wrong, we cannot avoid intimacy in ethics, for what we do-and what we dont do- is invariably a possible military issue of honest evaluation (Singer, 1993 v). There are various theories and approaches to ethics and honest close-making but the two major view points that appear are consequentailism and non-consequentialism. Consequentialism is where viewable decisions are based primarily on calculating the good in terms of consequences (Preston, 2007 36).The most widely accepted form of this is Utilitarianism, which was introduced by Jeremy Bentham in the late 19th century. This theory emphasises happiness or utility as a desirable goal for kind-hearted choice or action and argues that moral rules should seek to secure the greatest good for the greatest number of people (Preston, 2007 36). However, there have been some objections to this theory and the question as to how happiness and utility can be measured. It in any issue works against the interests of minorities and groups that do not measure up to the criteria of usefulness and can justify the rape of merciful rights (Preston, 2007 36).An example of this is the exclusion of a disabled baby bird from a school as they are disruptive. This would be justified on utile grounds as to leave such a disruptive kidskin in the class would not be beneficial to the majority of students. The second of these points that occurs in honourable theory is non-consequential. This enjoins us to do the right thing, exactly because it is the right thing, intrinsically (Preston, 2007 40). The most influential figure promoting this view was Immanuel Kant. He argued that as individuals we intuitively know what is right or wrong, through the flavourless imperatives, which are Act so that you treat humanity, whether in your own mortal or that of another, invariably as an end and never as a means only Act only on the maxim through which you can at the same time will that it be a universal law. Act only so that the will through its maxims could regard itself at the same time as universally law bragging(a) reference (Preston 200741) This Kantian theory has been very influential, especially concerning the debate of rights and umpire due to the importance that it places on every individual and because it is not give to persuasion by pragmatic circumstances.However, there have been some criticisms to Kants approach as he places too much reliance on human rationality. Furthermore, it does not provide an answer to the problem of how to decide between two conflicting duties and how to obey different bur equally unassailable rules. For example, do not break promises and do not kill are absolute rules, however it is possible for a situation to occur where these rules conflict and that by not brea king a promise, someone is killed. The focus of this essay is on Business ethics in expoundicular.Though the theories that have been mentioned are relevant, they are concerned primarily with personal ethics and do not enshroud directly the kind of honourable problems that arise within a business context (Vallance, 19954). Within an brass instrument, ethics is seen as everyones business and can be complex and have more than one meaning. Firstly, it is the application of world-wide ethical rules to business behaviour and secondly, it can be the rules of business by which business activities are judged.Business Ethics can be define as coming to know what is right or wrong in the workplace and doing what is right this is in regards to effects of products/services and in family dealingship with stakeholders (McNamara, 20067) and can cover a wide range of aspects from role and interference of employees to pricing. When it comes to business having an ethical responsibility, man y would argue that this is not the case. Indeed Milton Friedman (Friedman, 1970) said only people can have responsibilities.A friendship is an stylised person and in this sense may have artificial responsibilities, but business as a whole cannot be said to have responsibilities, even in this vague sense. With this in mind, it would to a fault be argued that it is of little importance for leaders to consider ethical issues when making decisions. Infact, leaders who have ethical consciences have been described as unwitting puppets of the intelligent forces that have been undermining the basis of a free nine these past decades (Friedman, 1970).This principle is that a business and and then its leaders have one purpose, and that is to aim as much profit as possible, with everything else existence secondary. Freidman said, He (the decision maker) is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the bus iness in unanimity with their desires, which generally will be to make as much bills as possible while conforming to the basic rules of society, both those substantiate in law and those embodied in ethical springer (Friedman, 1970).He believed that this was the case for all businesses with the only exceptions be schools and hospitals where a leaders verifiable would be the rendering of services. One of the beliefs of this line of work is that ethical responsibility as preached and practised by many marks an acceptance and endorsement of views and demands mostly presented by anti business groups that are hostile to the market economy and are far from representing the general view of the average consumer (Andersen, 2004 22).In asset to this fact a further problem is that in put for a leader to have an ethical conscience it usually comes at some court to the business and therefore is not in the interest of the owners of the organization. An example of this is that a leader w ould refrain from increasing the toll of the product in send to contribute to the companionable objective of preventing inflation, even though a price increase would benefit both the corporation and its owners. A similar example is that ay leaders use great amounts of money and resources to push down pollution beyond the amount that is required by law in smart set to meet its responsibility to the environment and gain a story as world an environmentally friendly keep familiarity. This was a measure taken by send broadcaster BSkyB who have been speed of light neutral since May 2006 through a combination of using renewable energy and offsetting its remaining emissions, but at a terms to the association. In each of these examples and in the case of other ethical activities a great amount of money is either spend or compromised.Many would argue that by doing this a leader is outlay other peoples money for a general social interest, which could be viewed as extremely wr ong. For example, carrying out an ethical activity that would have a high cost, such as cut back emission would reduce gelt and therefore stockholder would see a reduce in their returns on investments. In addition to this if a leaders ethical actions raise the price to customers, he is spending the customers money and if the cost of the leaders actions have to result in lowering the wages of some employees, he is spending their money.In these cases it would be fair to say that not only would it be having a detrimental effect on the company profits but would besides have a negative and unethical effect on both internal and external stakeholders, who may desert the company for a competitor that less scrupulous in exercising their social responsibilities. In addition to this it means that a leader in effect becomes a in the public eye(predicate) employee even though he remains in reality an employee of a private company.There is a further problem with leaders decision making that a company is to become more ethically aware as it involves great change in the way a company habituates, its values and its organizational culture. Many of these actions that need to be taken to implement an ethical practice can incur increased costs that may not be recouped through increased sales and have no batten down of returns. Furthermore, some decisions and choices made with an ethical conscience can result in short term negative impacts such as a shine in sales, revenue and profit, increased cost for employee welfare and a decrement in stock prices.Moreover, the vast majority of companies are still weakness to get their message across (The Guardian, 2004). With these costs in mind, especially in the current economic climate, the importance of a leader implementing an ethical culture to a business could be questioned. In addition to this leading a business ethically may involve compromising short term wins for the sake of a more long term view (Andersen, 2004 22). This is not beneficial for a leader who is responsible for immediate results, particularly if the short wins that are compromised due to ethical issues risk financial loss or even immediate failure.This may mean that a leader may have to accept higher prices on goods, parts and manufacturing in order to remain ethical. An example of this is that Tesco, the UKs mountainousst supermarket was using an Indian sweatshop to produce its clothes, which was nonrecreational its workers just 16p an hour. This supplier was changed in order for the company to appear more ethical and inturn cost Tesco money. This can be particularly hard in a market where there is a large amount of contest at both a national and international level.In order to compete a company needs to be able to twist the lowest price possible to its consumers but in order to bear its ethical stance a company can not compromise on its quality of suppliers and raw materials and therefore sees increased costs. Another considera tion is that when the corporation grows beyond the direct influence of its leader, we must reckon with the ethical consequence of size and geographical deployment. The control and employment of all policies, but especially that established for corporate ethics, becomes difficult (Andrews, 1989 7).This demonstrates that as long as an make-up remains small enough to be directly influenced by the chief executives leadership, certain results, such as ethical approach can be traced to his determination that they occur. However, as the organisation grows and becomes decentralised with worldwide operations the power and influence that the Chief Executive has is reinterpreted and diffused (Andrews, 1989 260). As a result leaders of have to be appointed in each location and these persons may not share the determination and beliefs of their chief executive on ethical matters.As a result it is hard to value a whole companys ethical approach. In relation to this cultural differences and diffe rent business practices around the world can present challenges for businesses that are severe to be ethical. Having considered the above argument there are some flaws to Friedmans approach. He suggests that a leader should concentrate on profit alone as long as it is within the law. However, the law does not define what is morally right and what is legal may be unethical. Many people would argue that this is an important point as good business ethics promotes good business. This was the findings of some well-known authorities such as Baumhart, Brener and Molander, who believed that only those businesses that conduct activities on ethical grounds can develop on a long-term basis. This is overly the stakeholder view that businesses will not make money if they do not take heed of their stakeholders CSR is flavor afterwards your stake holders and is good business practice. This is the reason wherefore it is important that leaders are not merely concerned with profit but also with promoting an ethical practise.Firstly, leaders who follow the principles of ethics in the conduct of business, motivates others also to follow the same principles (Paliwal, 2006 10). This can improve both employees and the organizations motivation and morale, which was discussed preceding as one of the main roles of a leader. This is because conducting business in an ethical trend can produce a feeling of doing things right and this can become an almost tangible positive ambience within the organisation and can create a culture with a sense of friendship and belonging for employees, (Andersen, 2004 7).The result of this is increased loyalty and productivity, which can result in an improved in warlike advantage. An example of a company that treats its employees well and is benefited in return is John Lewis. All 69,000 employees of the company have a share in it and despite seeing pre tax profits get down by 26% this year they still paid their employees bonuses worth 13% of their salaries.In addition to this if a leader and a company demonstrates that it is reluctant to compromise its ethical values then they are regarded as true(predicate) by both customers and their employees and this can promote productivity, innovation, employee development and increase employee attraction, which are again some of the main roles of a leader. This is vital to leaders as a study by Covey discovered that the average corporation loses half its employees within four years, and the cost of recruiting, training and getting new ones up to speed can be detrimental to an organisation. (Andersen, 2004 9). Also it is the leaders of a company that are responsible for its conduct and it is their actions that determine the companys ethical standards (Andrews, 1989 72). If a leaders strategy is to define and communicate ethical position then it can act as a agonistic advantage as it is an effective way of ensuring customer loyalty and also the companys ability to attract new customer s. Customers are now more sharp and better educated than ever and want a product that not only serves its purpose but also is produced by an environmentally responsible company.If a consumer understands and sees tangible evidence that they are contributing to something beyond the profits a company and its owner, it is a strong motivator for both their custom and their loyalty. An example of a leader who understood the importance of an ethical company and an ethical product was Dame Anita Roddick, founder of The Body Shop. The company was one of the first to prohibit the use of ingredients tested on animals, promote fair batch and also channelled a share of the cost of the product back to the original producer of the raw material.By doing this she created a unique selling point as an ethical company and therefore a company that consumers are proud to buy from. Furthermore, if an organisation is known to be ethical it gives the impression to the customer that they too will be fairl y interact as when ethical conduct is displayed it puts some kind of trust and self-assertion in relationship (Paliwal, 2006 9). An example of this is that prices reflect the real value of what is being bought.As previously mention, being ethical can also help to attract new customer, who will hopefully become loyal in time. This is because customers are exposed to so many marketing campaigns that they are watchful of which they should trust. However, if a leader has successfully managed to position an organisation with having ethical values and integrity then customers uncertainty is reduced, they are more trusting of the company and less afraid of purchasing its products, which meets leaders objectives.This was proved in a survey conducted in in the raw York in 1995, which indicated, when quality, service and price are equal, 90% claimed that the best reputation for social responsibility would determine their decision to buy. (Andersen, 2004 12). Therefore an ethical company should see an increase in sales, which is always part of a leaders strategy. A further factor for leaders to consider is that studies have shown a positive link between being ethical and improved financial behaveance (Maignan, 1987), which is ultimately the main aim of an organisation.Ethics in business can be related to quality of management, quality of products, innovativeness and good responsibility towards the community, all of which lead to awe, good will and a good reputation for the company. An example of leaders who saw the importance of a good ethical reputation are Ben Cohen and Jerry Greenfield, founders of Ben & Jerrys, who set up the sustainable Caring Dairy initiative to helps farmers and also took measures to reduce energy use. check to Ferrell, Maignan and Loe companies that are perceived positively in the market place perform better than others. (Andersen, 2004 13). Although this statement and other studies could be questioned as to what extent admiration is due to ethics, it can be said that an ethical approach to business is what contributes to a positive perception and reputation and can therefore be linked with financial improvements. A further example of this is that IAG (Insurance Australia Group Ltd), who work with neighborhoods to improve their facilities and reduce crime.This not only gives them a good reputation as a company that cares closely the environment but also benefits them in a second way as it reduces insurance claims and therefore reduces their payouts and equally benefits both the community and the company. Finally, leaders need to consider being a company with ethical values because investors and shareholders are now using a companys ethical stance as criteria to evaluate investments and stocks. An example of this is the specifically designed sub index of the capital of the United Kingdom Stock Exchange, the FTSE4Good (FTSE Financial Times Stock Exchange). (Andersen, 2004 19).To be included in this index, constitue nts must be screened according to the criteria of the FTSE4Good, which covers environmental sustainability, social issues and stakeholder relations and human rights. Therefore having a favourable ethical profile can attract investors and not having one can deter them. In addition to this, for the brass ethical standards of a business are now a key factor in the procurement of grants and influence. Having looked at these benefits, a leader also needs to consider the strength of being ethical by looking at the dangers and probable penalties of unethical business behaviour.As a society we have access to a wide conformation of information on organisations. As a result, there are constantly court cases against companies for unethical behaviour, for example in 2007 cruise company Carnival was being sued over several cases of mistreatment of workers and the covering up of environmental damage. Settling these claims can cost billions of pounds, can lead to bankruptcy and the damage to rep utation can be irreparable. A further example of this is that if a customer is treated below the belt then this bad reputation will be passed on by word of mouth.In relation to this a further factor that leaders need to consider when creating a business strategy is that unethical behaviour in manufacturing can lead to bad reputation. An example of this is the recent case with Primark, who were discovered to be using suppliers in Southern India who were using child labour. Although they claimed that they were unaware of this situation it still created a great deal of bad publicity for the company. Negative publicity can equate to decreased combative advantage, increased costs as companies have to increase public relations and advertising.It can also have effects on sales, profits, morale and the sidereal day to day running of the business. In addition to this a bad reputation cannot be easily changed and it consumers suspicion of a companys intentions and future actions. In relati on to this journalists writing about companies tend to fall victim of the so called Halo effect (Andersen, 2004 19), which means that a company that has a bad reputation tend to be seen negatively whatever they do. As the media have the power to make or break companies it is essential that leaders ensure that they are ethical and that there reputations remain intact.In this sense ethical behavior can be seen as a form of insurance against regulatory acts. An example of a company that have taken this on board is Marks and Spencer, who have recently launched a new Per Una lingerie range that is carbon neutral and is produced in an eco-factory as they become more successful in listening to what their customers want. A final problem to leaders of having an unethical approach is that there are always pressure groups and special interest group such as Greenpeace waiting to launch global campaigns against companies that act unethically, which can affect both the organisation and its chanc es of survival.An example of this is that in 2003 the Barclay twins, who were the two new leaders of Littlewoods mail order and clothing store, withdrew the companies membership of the good Trading Initiative (ETI), which was put in place to stop companies from using child or forced labor. This not only resulted in the sacking employees but was also provoked large volumes of criticism for charities, unions and politics ministers all of which impacted on the companys reputation. This increased government interest can also lead to regulations that create rigid trade and less freedom.Having looked at the two topics leadership and business ethics in some detail, it is clear to see that there is an important link between the two. A business operates according to the visions and values of its leader and whilst some may see business ethics as a fad leaders need to be aware that there is a high demand for ethical behaviour in our society today. It is fair to say that the objective of most companies, as Friedman said is to earn as much money as possible. Therefore, as a leader, that person is an employee of the owners of the business and so has a primary responsibility to them to conduct the business in line with their wishes.In addition to this there is a strong argument as to why a leader should not consider ethical issues as a vital part of their job. Many people share the skepticisms of Milton Friedman and Adam Smiths about the benefits that can be gestateed from those who affected to trade for the public good. This is a fact that has been discussed in the essay and the implementing a practicing ethical business can cost a company, for example, spending money on reducing pollution costs and choosing more expensive but ethical suppliers.In Friedmans book Capitalism and Freedom, he sums up this argument by expression that there is one and only one ethical responsibility of businessto use it resources and engage in activities designed to increase its profits so l ong as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud (Friedman, 1970). However, the other side of this argument is that in order for organization to survive in a competitive and changing environment, leaders must develop strong ethical standards and successfully implement them throughout the company.By trading in an ethical manner a leader will see a wide variety of benefits and effects on business practices, such as increasing sales, retaining employees, reducing litigation and in some cases increasing a companys profit. In addition to this, another testament to its viability is that despite being describes as a passing phase, business ethics which emerged in the 1970s has constantly gained more and more awareness and support, making it one of the longest surviving management fads (Andersen, 2004 24).Having considered this fact and all of the benefits, it is a hard for a leader to argue against the merits of an ethical approach to business. Overall, I believe that in order to remain competitive and to insure the survival of a business an organization must respect and regard their social and ethical responsibility as well as maintaining profitability as a central goal. It is fair to say that good ethics is good business since nowadays it can be directly linked to the companys success.Moreover, good ethics is good business because business partners, suppliers and customers expect and presevere business relationships that are upright and responsible. This is a factor that is going to become increasingly more important as consumers become more aware of ethical issues and the need for them to be considered, e. g. the increase in consumer awareness of carbon footprint. Therefore an ethical reputation will be important to the success of a company and it is a leaders job to ensure that ethics is part of a companies strategy and is successfully implemented.References K. R. 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