Introduction
The degree of complexity inside the business environment has increased over the past several decades. Increased competitive intensity as a result of rapid globalization is an illustration of such complexity (Clegg, Kornberger & Pitsis 2011). In order for businesses to survive in such a climate, it is imperative that they strengthen their competitive advantage. In addition to ensuring that they establish good relationships with a variety of stakeholders, businesses must ensure firm-level sustainability (Stubbs & Cocklin 2008). These aspects, when considered, would considerably foster customer trust and so encourage corporate success.
Scholars disclose many means through which businesses might cultivate customer trust. One of these is the promotion of ethical behavior within an organization, as the actions of organizations have a daily impact on consumers. These activities have either positive or bad consequences. The negative repercussions include environmental degradation and consumer rights violations. The legal context has offered justification for addressing the adverse impacts. In some circumstances, however, the law is viewed as an ineffective instrument for its implementation (Knights & Wilmott 2007).
Given the unprecedented increase in knowledge in modern society, consumers are increasingly requesting that firms verify their employees' ethical behavior. According to Northam (2005), organizational ethics cannot be established without effective leadership. This research seeks to determine whether the leadership style employed by a firm has a substantial impact on the ethical behavior of its employees. This objective will be attained by analyzing the impact of various leadership styles on employee ethics. Transformational, transactional, democratic, autocratic, and laissez-faire leadership styles are among those taken into account.
How leadership style influences employee ethics
Organizational conduct
In order to attain a common goal, organizations are comprised of individuals whose behaviors are governed and managed by management. Employees are responsible for collaborating to attain defined objectives. To accomplish this purpose, however, it is imperative that corporate leaders reduce and eliminate unpredictable behavior. The formulation of rules, processes, and codes of ethics, among other cultural and bureaucratic methods, is one of the means through which businesses attempt to govern employee conduct in the workplace (Knights & Wilmott 2007). According to Schwartz (2000), the integration of ethical norms promotes ethics effectively. Nonetheless, some employees may perceive that they are being coerced and, as a result, fail to adhere to the implemented codes of ethics.
However, the adoption of these tactics tends to diminish the employees' ethical duty. Therefore, it has become essential for businesses to incorporate the concept of ethical leadership in order to address the issue posed by dissident personnel. According to Brown and Trevino (2006), ethical leadership considers a variety of factors, including interactional justice, trust, honesty, and idealistic effect on the followers. In contrast, ethical leadership should not be subject to abusive supervision. Adopting an effective leadership style can have a big impact on how people perceive their leaders. In terms of decision-making, ethical leaders typically exhibit a high level of efficacy. Additionally, ethical leaders have a tendency to implement an effective internal communication channel in an attempt to influence the ethics of their personnel. They also establish explicit ethical norms that employees must adhere to.
Leadership is the practice of engaging and influencing individuals in order to achieve predefined objectives. In contrast, ethics refers to good and wrong conduct. There is a rather strong relationship between leadership and ethics. In the context of power, the uniting factor between the two parts runs deep. Leadership requires the ability to execute authority. On the other hand, ethics demand power for proper execution, which stems from the fact that persons must possess a certain degree of authority in order to carry out a particular conduct (Northam 2005).
According to Bolden and Gosling (2006), the world, and organizations in particular, are in critical need of competent leaders who uphold strong ethical standards. In order to remain competitive, it has become essential for organizations to evaluate their leadership styles (Sheraz, Zaheer, Rehman & Nadeem 2011). Schminke (2010) says that leaders' moral values have a direct effect on an organization's entire value system. Therefore, leaders are essential in shaping the ethics of an organization.
Leaders of an organization are responsible for integrating ethical principles that drive personnel to follow and pursue a certain objective. Previous theories and studies indicate that it is essential for leaders to influence the ethical behavior of their organizations (Kidwell & Martin 2008). Organizations are able to embrace a variety of leadership styles, which provides organizational leaders the choice to select the leadership style that best fits their organizations. Organizations employ bureaucratic leadership, transformational leadership, and transactional leadership, among other leadership styles.
Leadership characterized by
According to Schminke (2010), transformational leadership is the process by which leaders engage their followers to such an extent that they positively influence the morality and motivation of their followers. Leaders of an organization are expected to be champions in that they should encourage staff to attain organizational and departmental objectives. Effective leaders, according to Sheraz et al. (2011), possess transformational traits and motivate their colleagues in a variety of ways, such as through setting an ethical example in their professional and personal life.
Schminke (2010) says that for leaders to positively affect the ethics of their followers, they must be credible role models. Employees must establish the conviction that they can rely on their leaders for guidance. By virtue of their positions of authority, leaders are typically credible. However, leaders' credibility can only be established via their dependability, values, and decision-making skills. In addition, a leader's credibility depends on his or her ability to favorably impact staff ethics and reduce unethical conduct among employees (Schminke 2010). Scholars and researchers have identified three primary qualities that foster employee leadership: altruism, honesty, and skill.
Transformational leadership focuses mostly on intellectual stimulation, idealized influence, inspirational motivation, behavior, and individualized concerns (Sheraz et al. 2011). Transformational leaders, according to Kidwell and Martin (2008), persuade their followers to incorporate strong moral principles into their lives and work. Consequently, followers become aware of the significance and value of achieving desired objectives. By implementing this style of leadership, organizational leaders enable their followers to transcend their own self-interests and become more focused on team and organization-wide objectives. Therefore, it is possible to conclude that transformational leadership is extraordinarily effective at instilling ethics in people. As a result of their idealized influence, transformational leaders inspire people to behave collectively for the good of the organization as a whole, rather than for individual gain. This implies that any sort of self-interest in the conduct of employees should be avoided if one wants to adhere to the transformational leadership ethos.
Transformational leadership also plays a crucial role in ensuring that employees do their responsibilities ethically. Promoting the moral development of employees is one of the means through which this element is attained. In addition, transformational leadership encourages employees to internalize the diverse moral ideals that their leaders exemplify. Consequently, one of the pillars of transformative leadership is the cultivation of moral concepts such as integrity. Additionally, transformational leadership considers social responsibility and employee empowerment. This action results in an increase in self-efficacy among employees (Herman 2007).
For employees to behave ethically, it is essential that they possess a vision for the future. This argument is based on the observation that having a vision inspires employees to behave ethically. As a result of their inspirational nature, transformational leaders inspire a great deal of hope among their followers (Parker 2002). In addition, this leadership style encourages people to act ethically by assisting them in establishing their own identities. Employees are able to identify with their leaders. Transformational leaders can successfully develop a connection between the employees' self-concept and the organization's mission through their leadership (Kidwell & Martin 2008).
Transformational leadership provides various advantages. According to Kidwell and Martin (2008), this leadership style corresponds to a high degree of employee satisfaction. For instance, employees are content with their leaders and their work. Transformational leaders prioritize the professional and personal development of their workers, resulting in soaring levels of motivation and zeal for work and life. Furthermore, transformational leadership fosters a high level of organizational commitment.
Adoption of transformational leadership is especially useful for the development of a robust company culture (Ferrell, p.134). This goal is achieved through ensuring that staff comprehend the organization's mission. Developing an effective organizational culture can contribute to the establishment of ethical behaviors among employees, as the established culture will result in the construction of organizational norms that will guide employees in the performance of their jobs. Transformational leaders also motivate staff to adopt new ways of thinking, resulting in fresh learning opportunities.
Transactional management
According to Schminke (2010), transactional leadership is a kind of leadership in which leaders are concerned with engaging followers in order to develop a connection that contributes to the morale and motivating levels of employees. Transactional leadership is predicated on punishments and incentives administered to followers. Employees are rewarded for achieving a predetermined and mutually understood objective. This kind of leadership considers the moral character of the followers in an effort to help them realize their greatest potential.
According to Kidwell and Martin (2008), transactional leaders are more concerned with their own status quo than the demands of their followers. Personal accomplishments and authority are the primary sources of motivation for transactional leaders. In addition, transformational leaders have a tendency to incorporate the Management-by-Exception philosophy into their duties, which means they frequently avoid corrective actions.
Incorporating optimal cultural characteristics, such as an efficient incentive system and fair treatment of employees, in addition to an employee-centric approach, contributes to the development of outstanding ethics-related behaviors and attitudes among employees. Among the means through which transactional leadership accomplishes this objective is by establishing a series of transactions between employees and leaders. If the personnel meet the planned objective, they may receive wage increases or promotions as a reward (Schminke 2010). Unfortunately, these benefits are simply possibilities; nobody is assured of receiving the same.
The leadership style established by an organization influences the behavior of its employees via the numerous systems implemented into the process. One of these systems pertains to the adopted reward and punishment systems. According to Schminke (2010), a leadership style can be employed to influence and reinforce desired organizational behavior. Leaders drive employees to behave ethically by ensuring that they receive just rewards whenever they adhere to a predetermined guideline. The punishment system, on the other hand, conveys what employees should refrain from doing in their daily operations.
Autocratic administration
This style of leadership is similar to transactional leadership since authoritarian leaders have ultimate control over their followers. In an authoritarian institution, the fact that employees have no opportunity to participate in leadership is one of the greatest obstacles they confront. This is due to the fact that they are unable to voice their opinions to the top management. Autocratic leadership is one of the worst types of leadership since it generates dissension and revolt because employees cannot voice their actual problems.
Due to its rapid decision-making, autocratic leadership can contribute to the development of ethical organizational behaviors. This factor results from the fact that organizational leaders ensure their followers are focused on completing their jobs and achieving the organization's objective.
The disadvantage of this leadership style, however, is that it fails to foster strong relationships between staff and management. This leadership style may result in the development of unethical organizational behaviors, such as a high percentage of absenteeism, according to Brown and Trevino (2006). Therefore, one may argue that certain leadership styles, such as autocratic leadership, can encourage immoral behavior to a certain degree.
Democratic administration
This leadership style aims to create a work atmosphere in which people are supported and encouraged in their pursuit of morality and reason. By adopting this style of leadership, organizations foster high levels of ethical behavior among their employees because they provide them with opportunities to participate in the organization's operations, such as through participation in the decision-making process. The adoption of a democratic leadership style is crucial for the eradication of employee fantasies about their bosses. According to Yiannis (1997), employees may view their leaders as deities, which would have negative impacts on the executive-subordinate relationship.
By requiring employee participation in important decision-making processes, organizational leaders persuade employees to support decision execution. This eliminates any potential employee opposition (Jackall 2010). Employee opposition to the implementation of certain policies can result in the rise of unethical practices. Adoption of a democratic leadership style also adds to the development of ethical employee behavior, as employees have a sense of control over their professional success. This means that employees do not focus their happiness on monetary compensation, and hence, they tend to avoid unethical behavior.
According to Woods (2005), democratic leadership leads to the development of an empowering environment for employees. This leadership style encourages employees to realize their full potential. The democratic form of leadership necessitates that employees uphold a high level of ethical conduct in order to realize their ambition for advancement. Moreover, democratic leadership can impact the ethical behavior of employees by developing efficient cultural, social, and institutional systems. This purpose is achieved in part by ensuring that all staff appreciate the organization's diverse membership. Knights and Wilmott (2007) assert that democratic leadership encourages employees to be more conscientious and to respect the dignity and autonomy of their colleagues. This factor provides the rationale for employees' ethical reasoning and behavior. Therefore, the likelihood of intra-organizational conflicts based on variations in color, age, gender, culture, language, religion, and nationality, among other characteristics of diversity, is eliminated. This results in the formation of a mutually beneficial working relationship (Woods 2005).
Laissez-faire mode of leadership
This sort of leadership comprises a style in which people are permitted to work independently. For instance, employees are permitted to define their own time restriction for the completion of a specific job. However, team leaders give employees with the essential resources and guidance. The majority of the time, executives who embrace this style do not micromanage employee activities. This type of leadership can be highly effective in influencing employees' ethical behavior because leaders constantly observe and provide feedback on employees' actions and performance. Adoption of this leadership style significantly improves the level of job satisfaction among employees. Therefore, the probability of employees
