Significance of Business Ethics

Students Name

Institution of Affiliation

Course Title


Ethical Leadership

Leadership plays a crucial role in guiding the direction of a business as it is involved in decision making as well as the supervision of employees (Xu, Angela, Raymond and Hang-yue Ngo). Therefore, a business cannot thrive without the executives who will make decisions on behalf of the company; however, business decisions should be made in an ethical manner to prevent negative consequences that may arise from bad decisions. Ethical leadership should, therefore, be part of the executives both in terms of decision making and supervision. A leader must execute their duties in a manner that respects the rights, integrity, and dignity of other people especially the employees through employing the ethical principles such as justice and fairness, transparency and respect for them to be regarded as ethical leaders.

Business leaders should possess ethical leadership behaviors that will guide their decision making as well as the activities that they may engage in in the course of guiding the business to achieving its goals. One of the critical ethical behaviors that leaders must possess include honesty and trustworthiness as well as integrity in dealing with customers and employees (Freeman). Effective leadership must be guided by trust as it is perceived that high ranking business leaders who tend to be honest with their employees earn more respect and confidence as they instill to the employees the aspect of belonging as part of the whole team entrusted with steering the company towards its realization of the set targets, working together as a team. Telling the truth will help earn trust from the constituents as they will always be ready to agree with their leader, thus less disagreements.

Paying attention is another critical aspect of ethical leadership, not only for the stakeholders but also to the employees and other junior leaders (Kaptein). All interested parties in a business should be treated fairly by the decisions made by their representatives as the failure to address the constituents fairly will create and increase divisions within the organization. Decisions made must always be geared to maximizing the profits of the company but at the same time looking at the welfare of the employees. Maximizing profits may be coupled with such decisions such as cutting off costs that include laying off unproductive employees to reduce the payroll cost. Acts such as reducing payrolls and reducing health benefits are unethical, and such decisions should not be part of a leader who minds the welfare of their employees.

Teamwork plays an essential role in achieving the set objectives in a business as it is easy to realize the goals without disagreements. Divisions reduce the pace of production, and therefore, it is upon the leaders to team up their employees and assign objectives that need to be achieved together and not individually (Katzenbach and Douglas). Leaders should be at the forefront to spearhead the achievement of goals and therefore, should always be available for consultations. They are also entrusted with appointing leaders in the groups who will be guiding the supervision in the ground as they cannot be able to oversee all activities in a business. Working together builds up a community that has the sole purpose of achieving the company’s objectives.

Respect and inclusivity is another virtue that ethical leaders must possess in their positions of leadership (Wuffli). People have different opinions, and this can be used in a business to promote diversity not only on culture but also in decision making. Leaders as the center of focus in a company cannot make decisions alone as they have a single idea, which at times may not be valid or viable. Including the employees and other stakeholders in decision making allows for inclusivity as well as the provision of a variety of decisions that the business can choose from, which is a great benefit to the business as it will never fall short of valid ideas. Leaders, therefore, should not only include employees and other stakeholders into decision making but also make sure that they respect the opinions contributed as they are for the benefit of the company.

Works CitedFreeman, R. Edward. “Ethical leadership and creating value for stakeholders.” Business ethics: New challenges for business schools and corporate leaders. Routledge, 2016. 94-109.

Kaptein, Muel. “The moral entrepreneur: A new component of ethical leadership.” Journal of Business Ethics 156.4 (2019): 1135-1150.

Katzenbach, Jon R., and Douglas K. Smith. The wisdom of teams: Creating the high-performance organization. Harvard Business Review Press, 2015.

Wuffli, Peter A. “Introduction: A framework for inclusive leadership.” Inclusive Leadership. Springer, Cham, 2016. 1-7.

Xu, Angela J., Raymond Loi, and Hang-yue Ngo. “Ethical leadership behavior and employee justice perceptions: The mediating role of trust in organization.” Journal of Business Ethics 134.3 (2016): 493-504.

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