The main purpose of the article is to introduce the readers to the idea of combining ethics with strategic leadership methods. Thomas, Schermerhorn and Dienhart (2004) emphasize the importance of the leadership’s ethical behavior on the organization. The main aim of the authors is to describe ethical strategic behavior in the light of:
- Must be done cost of failure and stakeholder impacts)
- Can be done (influencing the majority to make ethical choices)
- Ethical choices are sustainable (enhancing the communication of culture and norms)
The key question that the author is addressing is whether the ethical principles within the leadership influence the whole organization. The main focus of the article is putting leadership in the context of ethical behavior in order to create mindful ethic responses within the whole organization. The main question the authors are trying to answer here is: what is the real cost of ethical failures and how the leadership is able to avoid them. The article identifies three different levels of ethical failure costs: fines and penalties, audit and regulatory, and reputation-based, stakeholder impacts.
The most important information in this article is to provide a framework for bringing together innovation in leadership and ethics. The main statement of the conclusion confirms that leaders who have an ethical vision are more successful in managing change, innovation and pushing the company as well as themselves further.
The main inferences/conclusions in this article are:
- integrity programs reduce illegal and unethical practices
- they support compliance goals
- they help companies identify breaches and unethical behavior due to higher reporting rate
- decision making is based on ethical guidelines on a daily basis
- this increases employee commitment.
The key ideas we need to understand this article is that ethics in leadership should not be handled as a separate entity: it is a successful tool to be integrated in everyday policies, leadership practices and day-to-day decision-making.
The main assumptions underlying the authors’ thinking are that ethical decision-making automatically has a positive impact on the organization. While there is a framework described to introduce ethics in the organization, there is no mention of the possible negative outcomes, employee resistance. The authors automatically conclude that ethical guidelines set by the leadership are in line with legal and compliance requirements.
- If we take this line of reasoning seriously, the implications are that companies’ most effective way of dealing with compliance and regulatory issues would be to introduce internal ethical guidelines and integrating them in the organization’s leadership approach.
- If we fail to take this line of reasoning seriously, the implications can be lower employee commitment, higher error and breach rates.
The main points of view presented in this article are:
- Effective leaders are working “with others to initiate changes that will create a viable future for the organization.”
- The leadership’s ethical principles and behavioral patterns are able to create great benefits or great harm for the full organization.
- An “amoral leadership” can create a “negative shift” while a moral leadership is supporting a “virtuous shift” within the organization.
The article’s strong and weak points are detailed below:
The clear explanation of the cost of ethical failures is the strongest point of the article. The authors clearly describe the damage made within the organization on each level. They also highlight the importance of taking responsibility for integrating ethics in everyday decision-making and stopping the impacts from escalating on the next level. This way, the article creates a logical reasoning and a sense of urgency in leaders to integrate ethics on the organizational level by describing the potential benefits. The examples from real businesses and management practices are suitable for demonstrating the importance of the business leadership issue.
Application: As compliance in highly regulated businesses and employee commitment are some of the most important focus points of the 21st Century organization, the article’s topic is extremely relevant to today’s business leaders. Davis, Read and Powell (2013) confirms that employee misconduct is usually the result of the lack of ethical guidelines, vision and mission. The authors – in line with the statements of Thomas, Schermerhorn and Dienhart (2004) detail the damages caused by ethical misconduct: organizational factors of the Ellen Cooke case. (p. 2.)
The “Lessons Learned” part of the article recalls the originally reviewed publication’s statements. Enforcing and gaining commitment towards policies and procedures increases compliance rate and reduces misconduct within the company.
Therefore, it is important that present and future leaders understand the importance of integrating ethics in decision-making, policies and everyday procedures within the organization. Madu (2012) also highlights leaders’ responsibility to encourage ethical collective efforts, act as a living example and create a positive culture within the company that enables the improvement of commitment, retention and strengthens ethical practices. As organizational cultures are created by leaders (Madu 2010, Thomas, Schermerhorn and Dienhart 2004), the ideology, ethics and values need to be originated from the leadership. Ethics should be an important part of core values, norms and support “moral and ethical behavior”. (Madu, 2012, p. 3.)
Davis, B., Read, D., Powell, S. (2013) Exploring employee misconduct in the workplace: individual, organizational, and opportunity factors. Journal of Academic and Business Ethics. Volume 8 – July 2013:
Madu, B. (2012) Organization culture as driver of competitive advantage. Journal of Academic and Business Ethics. Volume 5 – March 2012:
Thomas, T., Schermerhorn Jr., J., Dienhart, J. (2004) Strategic leadership of ethical behavior in business. Academy of Management Executive, 2004, Vol. 18, No. 2