4 minute read
Research Update
Building ethical leadership
Anna Earl outlines recent research into ethical leadership and provides some tips for HR professionals.
Research on ethical leadership conducted by the Institute of Business Ethics in 2017 revealed that most New Zealand organisations do not obey a code of conduct. Karin Lasthuizen, who currently holds the Brian Picot Chair in Ethical Management at Victoria University’s School of Management in Wellington, found that the enforcement of ethics is very challenging because New Zealanders are generally resistant to questioning colleagues and employees if something does not feel right for them.
A lack of ethics institutionalisation within organisations can be due to the New Zealand business community’s general belief that New Zealanders are decent and ethical people (see The importance of ethical leadership).
Recent studies provide several interesting insights. Findings suggest that while New Zealand organisations have made progress with developing a code of conduct, there is a lack of training programmes or open and consistent discussions about organisational ethical values. That’s why the objective here is to examine how organisations can build ethical leadership within organisations.
Leading by example
In their study, Brown, Treviño and Harrison defined ethical leadership as “the demonstration of normatively appropriate conduct through personal actions and interpersonal relationships, and the promotion of such conduct to followers
through two-way communication, reinforcement, and decision-making”. For organisations to develop ethical leadership practices, it is crucial that the leadership team exercise ethical behaviours that show the organisational values.
Continuous two-way communication and accountability for ethical and unethical behaviours and standards can help build trust with followers. Research suggests that employers lead by example; however, often there is a disconnect between organisational leadership styles and values. For this reason, HR managers can develop ethical leadership training tailored to their corporate values. This will help leaders to upskill and develop the necessary individual characteristics to practise ethical behaviours. HR managers should also have clear rules about ethical values and behaviours, which will create open and honest communication channels for leaders and followers – a crucial underpinning for authentic, ethical leadership.
Building ethical capabilities and ethical climate
Building ethical capability and climate in an organisation is crucial because it can help to tackle ethical dilemmas that HR managers face. To develop ethical capabilities, an organisation must be able to identify and respond to ethical issues. Ethical capabilities can be supported and developed by individuals, leaders and the ethical environment. To develop an ethical climate, HR managers can ensure that everyone, despite their status, understands what constitutes shared beliefs of what is right and what is wrong.
Most organisations in New Zealand do not provide training for employees on procedural steps to address unethical behaviour. The institutionalisation of ethics in organisations needs to go beyond introducing a code of conduct. HR managers need to have straightforward training programmes during the induction process to help individuals to categorise ethical issues.
Ethical capabilities and climate can influence organisational reputation and legitimacy, which can significantly influence recruitment processes and success in finding top talent. We see a strong trend in the eagerness of New Zealand’s younger generations to work in organisations with ethical values. This can be detrimental for organisations because younger generations have employment options and want to work for organisations with high ethical standards. So, to attract the top talent, HR managers need to create financial and human capital to develop ethical leaders and an ethical climate within organisations.
Ethical leadership can help organisations to change and to develop an organisational culture where everyone feels comfortable to speak up and call each other to account if someone does not exercise ethical values. To give people a voice, HR managers can build relationships with the employees and leadership teams. Ethics are the future of work, and HR managers need to institutionalise ethical values in all HR practices.
Dr Anna Earl (PhD) teaches advanced human resource management. Her main research interests revolve around the relationship between government and multinational enterprises, and the practices of qualitative researchers. Her current research interests are in emerging economies and stakeholder relationships. In particular, she is interested in organisational change under complex institutional conditions, as well as the role of leadership styles and multinational enterprises.
