Ethics in Business: Benefits of Ethical Leadership - Essay Sample

Introduction

Employees, management, and customers appreciate ethical and honest practices in the workplace. Business ethics are significant since they enable the maintenance of a great reputation and help avert important legal and financial issues. All the individuals involved benefit from ethical leadership, which creates a harmonious environment to work. Therefore, the purpose of this paper is to evaluate the importance and purpose of ethical leadership

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Importance of Business Ethics

Business ethics ensure employee morale and loyalty and the strength of a management group connection. It is related to the profitability aspect in the long and short term of the business. Business ethics encompassing ethical decisions and actions, resulting in sustained profitability and long run existence. Companies that operate ethically make investors be highly inclined to purchase stock and support the operation of the business. It lays a sound basis for the business for sustained and continued existence (Manjulata, 2019). Business ethics allows the company to conduct its activities as a responsible corporate citizen in the nation, becoming a system that develops wealth for society. Also, it helps in different management functions including finance, where ethics deals with different ethical violations and dilemmas in daily financial transactions.

Ethics in finance allows authenticity and truthfulness in business transactions, seeking the fulfillment of mutual benefits and get financial and economic system free from methodologies based on greed (Manjulata, 2019). Ethics in human resource management enforces the employees' rights in an enterprise, including the right to work and compensation, right to free participation and association, fair treatment in an enterprise, right to work in a hazard-free environment (Manjulata, 2019). In marketing, ethics deals with developing false impressions on the consumers about products features, the decision on high prices of services and products, misinformation of customers on the services or products, and eradicating sexual attitudes spread through advertising, preventing influence on children, and young generation (Manjulata, 2019). Ethics in production addresses the organization's responsibility for ensuring the processes and products of production pose no threat to the ecosystem (Manjulata, 2019). It deals with the maintenance of ethical relations with the environment and preventing environmental pollution. Also, it averts producing products or rendering services which are hazardous to the health of individuals.

Leadership's Role in Ethical Decision Making

Through sensemaking, leaders create models of circumstances that draw significant information from the mental models and develop decisions founded on information from the business models (Thiel et al., 2012, p. 2). Leaders make ethical decisions in an equivocal and uncertain environment, which requires sensemaking to develop an ethical dilemma to makes sense of ethical circumstances. Leaders engage in sensemaking in high-stakes, ambiguous decision making, including ethical decision making. The process of sensemaking focuses on the leader's ability to develop a problem situation, and the development of the issue might be affected by multiple individual and situational factors (Thiel et al., 2012, p. 3). In this regard, leaders are a significant population in the workplace who require strategies to navigate and manage the inherent moral risk placed on them as a function of the complex environments.

Through emotional regulation, leaders assess the emotions they experience in an ethical dilemma induce by the circumstance and mange it regarding the situation. Uncertainty can be interpreted in the context of using emotions for information entailing response to an event. Leaders who undergo training intervention to facilitate prior detection of emotions and applying specific emotion regulation techniques may increase the making of sound judgment through accurate and complete sensemaking hence ethical decision making (Thiel et al., 2012, p. 3).

The process of self-reflection in sensemaking allows leaders to draw upon individual experience to accurately create sense in the situation and come up with potential decisions. Leaders' ability to predict future events from personal experiences through temporal orientation and affective frame enables them to work through ethical issues (Thiel et al., 2012, p. 4). Past and future-focused self-reflection is a significant technique for leads hoping to ensure ethicality in their choices.

Sensemaking also utilizes forecasting to make predictions of possible future results by observing the current situations (Thiel et al., 2012, p. 4). Leaders in this context solve the sophisticated issue by generating various problem solutions and predict the consequences of their decisions and solutions. Accurate prediction of various behaviors facilitates sensemaking and limits the probability for chances of behaving unethically in complex and ambiguous circumstances.

Information integration in sensemaking entails information gathering procedures setting the tone, and determining the direction of the issue with leads benefiting from possessing several avenues of action to consider. However, information integration can be negatively affected through factors including external pressures like recent events, budget issues, conflicting organizational goals; perceived threat by others; and out-group in-group variations (Thiel et al., 2012, p. 5). Leaders' awareness of external and internal influences can completely embed information in coherent models and providing the best likely response to an ethical problem.

Ethics in a Global Economy

With business ethics focusing on the ecological and social responsibility of a business, the business decisions in this regard should be made by taking into account the ecological and social concerns and not be exclusive to a narrow economic perspective. Business ethics might prove significant in moderating various negative phenomena and consequences in the global system. More so, it offers economy based on the human principle that focuses on entrepreneurial processes being for the people, made for them hence appealing for entrepreneurship to be understood in a larger sense of ecological and social relations (Svitacová & Kováciková, 2016, p. 715). Ethics advocates for the respect of morality in business, aiming to eradicate negative phenomena linked with entrepreneurship.

Social Responsibility and Stakeholder Relationships

Information on corporate social and ethical responsible enterprises likely arouses positive and strong responses among stakeholders. The external and internal communication of corporate social responsibility efforts possesses potential business benefits. Research indicates that companies with a high propensity to expose their ethical and social gals are highly likely to evoke crucial stakeholders' attention. However, studies also indicate that companies focusing intently on exposing social ambition might be hiding something. Therefore, effective governance of the corporate social responsibility goals helps the management attain better financial results while improving the community it operates in through better living standards of the external and internal stakeholders of the company (Baric, 2017, p. 134).

Leadership Traits and Characteristics

Ethical leadership styles, behaviors, and attitudes create a positive ethical climate in the workplace, ensuring productivity and profitability. Ethical leadership is crucial in enhancing the organizational climate having a positive impact on citizenship (Aloustani et al., 2020). Leaders using ethics in integrating environmental problems in practices, procedures, and policies of the organization improves environmental performance and, in turn, encourage the workers to engage in an eco-friendly behavior (Saleem et al., 2020).

Conclusively, business ethics is important in ensuring group connection of employee morale and loyalty and the strength of management related to the profitability aspect in the long and short term of the business. Sensemaking ensures the leader's role in the company in the process of emotional regulation, self-reflecting, forecasting, and information integration. Ethics in the global economy advocates for the respect of morality in business, aiming to eradicate negative effects linked with entrepreneurship. Information on corporate social and ethical responsible enterprises likely arouses positive and strong responses among stakeholders. Ethical leadership is crucial in enhancing the organizational climate having a positive impact on the employee and consumers. Ultimately, business ethics is important in the effective management of the business and developing a better world. For the future, research needs to be conducted to evaluate the importance of business ethics to ensuring consumer reliability of the business.

References

Aloustani, S., Atashzadeh-Shoorideh, F., Zagheri-Tafreshi, M., Nasiri, M., Barkhordari-Sharifabad, M., & Skerrett, V. (2020). Association between ethical leadership, ethical climate and organizational citizenship behavior from nurses’ perspective: A descriptive correlational study. BMC Nursing, 19(1). https://doi.org/10.1186/s12912-020-0408-1

Baric, A. (2017). Corporate social responsibility and stakeholders: Review of the last decade (2006–2015). Business Systems Research Journal, 8(1), 133-146. https://doi.org/10.1515/bsrj-2017-0011

Manjulata, M. (2019, August 24). Business ethics: Introduction, principles, importance, theories. Economics Discussion. https://www.economicsdiscussion.net/business/business-ethics/31798

Saleem, M., Qadeer, F., Mahmood, F., Ariza-Montes, A., & Han, H. (2020). Ethical leadership and employee green behavior: A multilevel moderated mediation analysis. Sustainability, 12(8), 3314. https://doi.org/10.3390/su12083314

Svitacová, E., & Kováciková, E. (2016). Roles of business ethics in new global economic environment. International Scientific days 2016 :: The Agri-Food Value Chain: Challenges for Natural Resources Management and Society :: Proceedings. https://doi.org/10.15414/isd2016.s8.20

Thiel, C. E., Bagdasarov, Z., Harkrider, L., Johnson, J. F., & Mumford, M. D. (2012). Leader Ethical Decision-Making in Organizations: Strategies for Sensemaking. Journal of Business Ethics, 107(1), 49-64.