How to be an Ethical Leader: 4 Steps

Posted by: Nigel Girling Post Date: 27th August 2015

The application of ethics to business should be a consideration for every leader, and something every organisation should address in its stated values. Quite often, however, it gets ‘hijacked’ by the idea of using it for PR, marketing and propaganda.

So, what do we mean by ethics? The Collins English Dictionary defines it as “the philosophical study of the moral value of human conduct and of the rules and principles that ought to govern it.” Of course, business ethics comes down to the “human conduct” of the leaders who make decisions within organisations, and there are certain “rules and principles” these leaders should follow.

Here are 10 steps towards becoming an ethical leader.

How to be an Ethical Leader: 4 Steps

1. Define what ethical dilemmas you face

Start by considering the impacts of your organisation in its different roles, such as employer, purchaser, or neighbour. Consider how you affect your stakeholders and others you come into contact with, or how you act as a contributor to local, national or international economies. To do this effectively, use our guide to stakeholder analysis.

Your organisation or sector might have inbuilt ethical challenges. For example, if you promote cigarettes or unhealthy food and drink, manufacture munitions, or consume large amounts of fossil fuels, then combating ethical dilemmas might be a familiar part of your role.

On a more personal level, as a leader you may face day-to-day ethical decisions about a range of issues, including recruitment, deployment, and performance management. Make a list of the ethical dilemmas and decisions you face, and ask colleagues for input.

2. Identify potential conflicts

It is often possible to see, if viewed objectively, where ethical behaviour could conflict with the expedient needs and driving forces of your organisation. For example, the organisation may be driven to reduce costs of purchased raw materials, and may be able to do so by switching from a UK supplier to a 3rd world supplier; but this might then raise ethical considerations about social and economic damage to the UK supplier, and about the living and working conditions of the 3rd world source.

In another example, a UK service business may find it financially advantageous to re-locate to a cheaper area of the country, but this would cause significant upheaval and stress to staff and may bring about a significant reduction in property values in their previous community when hundreds of houses are listed for sale simultaneously. Local traders and communities may also suffer as the economic engine of the area is removed.

From your list of ethical dilemmas, identify those that conflict with the organisation’s main objectives.

3. What can you compromise on?

For most of us, our values and ethics come in the form of a prioritised list, with some sacrosanct, some preferred, and others more flexible. Consider the list of dilemmas that could conflict with business objectives, and identify which are intrinsic to the running of the business, and which you could compromise on. For example, if you are an advertising agency focusing on the fast food industry, the success of the organisation relies on its ability to convince the public to consume unhealthy food, so this cannot be compromised.

On the other hand, you could potentially reconsider wages and start recycling without causing huge disruption. Your ability to compromise will also depend on the extent to which your ethical intentions are shared by others in the organisation. So, if environmental impact is a concern shared by your colleagues, you may be able to achieve the go ahead to make significant changes.

4. Consider your personal impact on others

As well as influencing the company’s ethical impact, you are responsible for your own behaviour, and how this affects those around you. Exerting pressure on others to achieve targets is probably an intrinsic part of your role, and this can lead to stress and anxiety among team members. Of course, you can’t eliminate this pressure, but there are lots of measures you can take to improve the experience of those you manage.

Empowering and developing others: An ethical leader grows their team and helps people to fulfil their potential, enabling them to gain job satisfaction and high self-esteem. Think about how you can support your team members to be the best they can be.

Increasing morale and motivation: We now know that people’s brains become significantly more creative and engaged when they are happy and in a positive frame of mind. Old-school managers often find this a difficult concept, especially if they come from the ‘you should be grateful just to have a job’ corner. But being tough or mean does not make you a strong leader; it takes far greater strength and skill to be supportive and encouraging. Consider what you could do to make your team members enthusiastic about performing well.

Establishing a cohesive team culture: High-performing teams tend to be close-knit and well-rounded. They have learned to trust and value each other, and have confidence in each other’s abilities. An old fashioned command and control approach, and a heavy focus on individual targets, drives a coach and horses right through the middle of this, creating division, selfishness and unhelpful competition. How well formed is your team? Do they appreciate and understand each other? What do you do to bring them together?


Ethics, like beauty, is in the eye of the beholder. Are you comfortable with the way things are? If not, what are you going to do about it? Leadership ethics is covered in depth within our leadership and management programmes

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