Ethical Leadership Is A Very Important Issue Business Essay

The entire culture of an organization starts with its leaders. We so often hear the words “corporate culture” that we really do not pay attention to what this implies. In Richard Barlow’s article in the Boston Globe regarding Microsoft’s corporate culture, he goes into detail about how the company operated. “Bill Gates was a brilliant technologist when he cofounded Microsoft, but as he guided it to greatness in both size and historical consequence, he blundered. He terrorized underlings with his temper and parceled out praise like Scrooge gave to charity. Only the lash inspired the necessary aggressiveness to beat the competition, he thought. Just how wrong he was became clear when the government brought antitrust charges against Microsoft in 1998.” This quote shows how the culture of an organization directly reflects it’s leadership. From this example the author provides, we can see that Bill Gates was very demanding and did not sound like the most reasonable employer. This type of leadership produces the type of model that the ends justify the means. This could cause the employees to cut legal corners, steal rival companies information, bribe individuals, as well as countless acts of unethical behavior. There is nothing wrong with being a tough and demanding boss, but you can’t set up an unethical model of business. You have to make the employees work to the best of their ability with whatever means they can abide by the law to accomplish a goal legally.

There are certain characteristics that high level executives should be aware of when they are hiring managers to run their employees. These “win at all costs” type of managers will create an atmosphere where the employees do not feel comfortable reporting to upper level management when they feel a superior is acting inappropriately. In Deepak Malhorta’s Harvard Business Review Article titled “When Winning Is Everything”, he describes the certain characteristics that can be disastrous for a company. “In the heat of competition, executives can easily become obsessed with beating their rivals. This adrenaline-fueled emotional state, which the authors call competitive arousal, often leads to bad decisions. Managers can minimize the potential for competitive arousal and the harm it can inflict by avoiding certain types of interaction and targeting the causes of a win-at-all-costs approach to decision making. Through an examination of companies such as Boston Scientific and Paramount, and through research on auctions, the authors identified three principal drivers of competitive arousal: intense rivalry, especially in the form of one-on-one competitions; time pressure, found in auctions and other bidding situations, for example; and being in the spotlight — that is, working in the presence of an audience. Individually, these factors can seriously impair managerial decision making; together, their consequences can be dire, as evidenced by many high-profile business disasters. It’s not possible to avoid destructive competitions and bidding wars completely. But managers can help prevent competitive arousal by anticipating potentially harmful competitive dynamics and then restructuring the deal-making process. They can also stop irrational competitive behavior from escalating by addressing the causes of competitive arousal.” While it is important to remain competitive, these are obvious traits that can ruin a company if they are not balanced correctly. It is up to the higher level management to make an example out of someone or something if there is unethical behavior that is being practiced. If they overlook any type of unethical behavior, their company might eventually pay for it in the very near future.

Once a company has created an ethical culture and the high ranking officials can be seen as making ethical decisions, the company needs to make sure that they promote individuals who are complying with ethical work ethics. Again, this is all up to management. If management is making ethical business decisions but they are not checking to make sure their employees are, then they are being irresponsible. If you are making ethical decisions, then your staff underneath you is much more likely to follow in what you are doing. In Dov Seidman’s article in The Academy of Management Executive, he discusses why it is important to promote those who are following ethical behavior in the organization. “Make it a sign of career advancement to be aligned with the program. An aerospace and industrial manufacturing company appointed over 200 Business Practice Officers who are specifically accountable for ethics in each business unit. Being selected for this critical job is an indication that an employee is on the fast track to becoming a future company senior leader.” Obviously the more ethical the employees are, the more productive the company can become. If the employees are constantly trying to cover up any suspicious activities, lying to superiors, and covering their tracks, then they will be loosing time in productivity for the company. They may be initially able to reach a goal quicker or get better results because of unethical behavior, but it will most likely always catch up with them.

Having to meet high expectations is on of the main factors that can lead to unethical behavior. If you are held at a high level of accountability and can bring your company success, it will be very hard to keep your job. The corporate environment is very demanding for results, and this can be seen across American corporate culture. Dov Seidman’s article also discusses how why the spotlight can be so demanding for high ranking business officials. “In negotiations, bidding wars, and business disputes, the strength of the spotlight can vary considerably. Some disputes are public affairs; others are shielded by gag rules. The brighter the spotlight, the greater is the potential for competitive arousal and bad decisions. The Blackstone Group, a prominent private-equity and investment management firm, provides an example. In early 2007, under the glare of the business-media spotlight, Blackstone acquired Equity Office Properties Trust, the largest owner of office buildings in the United States. Blackstone’s final offer of $23 billion in cash and an assumption of $16 billion in debt surpassed Vornado Realty Trust’s final offer by $3 billion and was the largest private-equity deal ever. Would Blackstone have been willing to pay such a premium without the tremendous media attention? Our research on competitive arousal suggests that the spotlight may have been influential in this case. In its coverage of the deal, the Wall Street Journal highlighted the increasing tension created by the sometimes incompatible goals of wanting to score a much publicized win and wanting to make a sound economic decision. “The culture of private-equity giants like Blackstone,” the Journal wrote, “is built on two competing foundations, the reluctance to lose any deal – particularly one as big as this – and an equal unwillingness to pay too much for any deal.”

Through the examples provided and the research of others, ethical leadership is a very difficult type of leadership to attain. It also just does not reside to the leaders of the company, it applies to every single one of the employees. When a company realizes that every single employee and action that it takes is a direct reflection of the company, the company can then move forward in ethical manners concerning their corporate culture.