U05: It’s Up to the Leader to Set the Ethical Climate

According to Victor and Cullen (1987), an organization’s ethical climate forms the ethical character of the organization, by providing the environmental cues that guide ethical behavior. Ethical standards are the standards of our environment that are acceptable to most people. These standards are what most people consider good and the way one behaves without rules and regulations. While most decisions are routine, we can unexpectedly face an ethical dilemma when unusual situations occur suddenly for which we need an immediate response.

An organization’s ethical climate represents what employees perceive as ethically correct behavior and how ethical issues should be handled (Victor & Cullen, 1987). As an organization faces new ethical situations, organizational leaders are shaping the perceptions of expected behavior through the practices they reward and encourage. It’s really organizational play the dominant role in creating and maintaining ethical climates and establishing the foundation between choice and balance for ethical decision-making.

Leaders’ actions both directly and indirectly establish the ethical tone of an organization (Lee, 1986) by the actions that they encourage, reward, and demonstrate. The actions of direct leaders provide an immediate indicator of appropriate behavior. Leadership plays a vital role in establishing and communicating an organization’s ethical climate. Leaders provide direction and facilitate organizational goal-setting processes (Zaccaro & Klimoski, 2001). Leaders are responsible for instituting standards of ethical conduct and moral values that guide the behavior of followers (Mautz & Sharaf, 1961).

Values influence people’s behavioral choices as they act in a way that is consistent with what they value. Ethical leadership involves the integration of personal values (Gottlieb & Sanzgiri, 1996). It is important for leaders to have awareness of personal values, ethics, and morals as they influence the choices they make and the behaviors in which they engage.

Leaders are role models of appropriate behavior and their actions have a strong influence over the ethical conduct of followers (Andrews, 1989). Leader role models are the primary influence on individual ethical behavior, particularly the behavior of direct managers and supervisors (Falkenberg & Herremans, 1995). Thus, employees often view a leader’s actions as the standard of acceptable conduct. Leader actions that clarify ethical issues and boundaries of behaviors help reduce ethical dilemmas.

Many think of charismatic leaders as ethical leaders. Charismatic leaders encourage excellence and achievement in their followers by influencing followers’ emotional connections. Charismatic leaders develop this emotional attachment by laying out a vision that arouses deeply held values in followers (House, 1977). Charismatic leadership approaches help increase the acceptance of the organization’s ethical values leading to greater congruence of values between the followers’ and the organization. As people tend to act in a manner consistent with their values, these values likely influence views on appropriate conduct, thereby further shaping the climate related to ethics.

Leaders can improve the overall ethical climate through socialization processes, coaching, and mentoring. These processes allow individuals to acquire the knowledge, behaviors, and norms necessary to become an ethical organizational member (Bauer, Morrison, & Callister, 1998). Coaches and mentors can provide direct feedback on ethical conduct to individuals to eliminate any additional ambiguity, create more ethical awareness, and communication standard policies and practices towards accepted organizational behavior. Such socialization and support also communicate what behaviors the organization condones and how it expects employees to conduct business.  Perceived trust in a leader is an especially important factor in the development of ethical climate. When perceived trust is low, followers will likely be less inclined to accept the leader’s visions and values.

Without the emphasis on ethics, organizations can miss the opportunity to reinforce responsibility for their internal and external environment. It is up to organizational leaders to establish and communicate an organization’s ethical climate and to act as role models in setting an example of acceptable organizational behavior.



Andrews, K. R. (1989). Ethics in practice. Harvard Business Review, 99–104. Retrieved from https://hbr.org/1989/09/ethics-in-practice

Bauer, T. N., Morrison E. W., & Callister, R. R. (1998). Organizational socialization: A review and directions for future research. Research in Personnel and Human Resource Management 16, 149–214. Retrieved from http://psycnet.apa.org/record/1998-07789-003

Cullen, J. B., Victor, B., & Stephens, C. (1989). An ethical weather report: Assessing the organization’s ethical climate. Organizational Dynamics, 18, 50–62. doi: 10.1016/0090-2616(89)90042-9

Falkenberg, L., & Herremans, I. (1995). Ethical behaviors in organizations: Directed by the formal or informal system. Journal of Business Ethics, 14, 133–143. doi: 10.1007/BF00872018

Gottlieb, J. Z., & Sanzgiri, J. (1996). Towards an ethical dimension of decision making in organizations. Journal of Business Ethics, 15, 1275–1285. doi: 10.1007/BF00411813

House, R. J. (1977). A 1976 theory of charismatic leadership. In J. G. Hunt and L. Larson (Eds.), Leadership: The Cutting Edge, Carbondale, IL: (Southern Illinois University Press, pp. 189–207.

Mautz, R. K., & Sharaf. H. A. 1961. The philosophy of auditing. Sarasota, FL: American Auditing Association.

Victor, B., & Cullen, J. B. (1987). Theory and measure of ethical climate in organizations.  Research in Corporate Social Performance and Policy, 9, 51–71. doi: 10.2307/2392857

Zaccaro, S. J., & Klimoski, R. J. (2001). The nature of organizational leadership: An introduction. In S. J. Zaccaro and R. J. Klimoski (Eds.), The Nature of Organizational Leadership, San Francisco, CA: Jossey Bass, pp. 3–41.


  1. Jasmine Nicole Hall April 22, 2018 at 8:19 PM #


    I agree that it is the leaders duty to set the ethical guidelines for the followers. Leaders and followers are seperated for a reason, correct? Followers value something about a leader, which is why the choose to follow and mimic their values, morals, and even their ethics. This could ruin the entire organizational climate due to the leader having unethical thoughts. So what does it take to be an ethical leader?

    While it may be easier to see a leader as destructive due to their abusive of power, there are more dimensions of ethical leadership. Leaders can learn ethical values and morals for the betterment of themselves and their followers. There are five well-known principles of ethical leadership, which include: respect, service, justice, honesty, and community. Per Northouse (2015), “respect means that a leader listens closely to followers, is empathic, and is tolerant of opposing point of view. It means treating followers in ways that confirm their beliefs, attitudes, and values” (pg. 343). Leaders need to nurture their followers in personal development, to establish a respect for the leader-follower role, and vice-versa. When leaders take the time to focus on their followers’ needs, morals, and values, leaders will tend to return the same amount of respect for the leaders’ needs, morals, and values. “As Beauchamp and Bowie (1988, pg. 37) pointed out, “Persons must be treated as having their own autonomously established goals and must never be treated purely as the means to another’s personal goal” (Northouse, pg. 342). When respect is established in a leader-follower relationship, all individuals have a sense of worth in the organization. Leaders should also serve others in a sense of altruism and servant leadership. One of the main focuses for effective leadership is when the leader places the followers’ needs in their top priorities for the organization’s development. Kanungo & Mendonca (1996) shares ways that altruistic service behavior can be observed through: empowerment behaviors of the leader, mentoring, team bonding, and citizenship behaviors. While Greenleaf’s (1970) servant leadership theory “has a strong altruistic ethical overtone in how it emphasizes that leaders should be attentive to the concerns in how it emphasizes that leaders should be attentive to the concerns of their followers and should take care of them and nurture them” (Northouse, 343). In other words, being a leader, one should have the same intuition that a mother has for her child. Followers are in some sense like the leader’s children. To be an ethical leader, the leader must nurture these followers with objectives that are not natural to them, like adapting to change and how to deal with moral decision-making. An ethical leader should be someone who does not see what all they can achieve with their followers’, but should be a leader who wants to see how much their followers can achieve thorough the leader’s time and work efforts. To be a successful leader, one needs to embed the same morals and traits into each employee to ensure they are morally supporting the reputation the follower desires for the organization. Serving to treat others as equal correlates the leader’s demeanor to be just. Per Northouse (2015), “they [leaders] make it a top priority to treat all of their followers in an equal manner. Justice demands that leaders place issues of fairness at the center of their decision making” (pg. 344). Seeing a leader treat followers different from each other, causes the followers to be labeled into the Leader-Member Exchange theory (LMX) of in-group and out-group members. To be a good leader, one must be honest and just with their actions and decisions. If the leader is not just nor honest, the followers will begin to undervalue the leader as a person, and will deem his further words and actions unreliable until proven otherwise. Being honest and just, is not all about telling the truth, but more of a sense of being open to everyone involved in the organization and treating everyone as one team. Followers have different needs for different situations, but a follower should not label a follower depending on how much more or how much less they do for the organization or for the leader’s benefit. Dalla Costa (1998) states: “Do not promise what you can’t deliver, do not misrepresent, do not hide behind spin-doctored evasions, do not suppress obligations, do not evade accountability, do not accept that the survival of the fittest’ pressures of business release any of us from the responsibility to respect another dignity and humanity” (pg. 164). Each of these principles tie into one another in some form with the same result of building the community. Per Northouse (2015), “an ethical leader takes into account the purposes of everyone involved in the group and is attentive to the interests of the community and the culture. Such leader demonstrates an ethic of caring toward others (Gilligan, 1982) and does not force others or ignore the intentions of others (Bass & Steidlmeier, 1999)” (pg. 347).

    It is crucial to understand that leadership involves morals and values. There have been centuries of documents available to help society understand what a “good” leader is. Over the last few decades, due to corrupt figures of authority, ethical leadership has been a treading topic. Though, there are more substantial research to understand leadership ethics, many organizations do not consider using these theoretical practices nor has many programs been available to educate the individual on ethical leadership. There are some programs that do help leaders become a better leader in the organization and in their lives, but none that prioritizes the effects of practicing ethical leadership solely for the betterment of themselves as a leader, to help the personal growth of their followers, and to build a better bond between the leader-follower relationship. Leaders need be able to put their own values/morals aside and think what is ethically correct for the organization as a whole.
    PSY 533 (2018) states there are three primary components to organizational climate (Ostroff, 1993), which include:
    • “Affective: Concerns for interpersonal/social relationships in the workplace
    • Cognitive: Concerns for one’s relationship with the work itself
    • Instrumental: Concerns for integration of people and tasks for getting the job done”.
    “The ethical climate is actually created by everyone in the organization, not just the leadership, so if the climate is unethical, even an ethical leader may be unable to raise it to a moral high ground and significantly improve ethical organizational performance” (PSY 533, 2018). To help solve the matter of unethical leadership, Arnaud (2010) theory on ethical theory may come in handy due to it being more detailed. Arnaud combines individual and group/society-level components within her theory, and believes that the holistic look into ethical climate in the workplace includes 4 dimensions. These dimensions are:

    • “Collective moral sensitivity combines moral awareness and empathetic concern. In general, this is the ability for the organization to be able to detect moral issues using social norms and show compassion for those concerns.
    • Collective moral judgment takes the social norms from collective moral sensitivity and uses them as criteria for judging right and wrong.
    • Collective moral motivation is the energy behind the moral reasoning. In other words, what moral values are driving ethical behavior — honesty and fairness or power and personal achievement?
    • Collective moral character brings us back to character models of ethics that we discussed near the beginning of the course. In particular, what are the personal characteristics of the individuals in the organization driving moral reasoning?” (PSY 533, 2018).

    This organization needs to work on its ethical climate, and with Arnaud’s theory being more detailed, though being more time consuming and harder to use, it is the most useful theory to use to solve the unethical decision making of leaders, which will create a healthier work environment for everyone.

    Great job on this unit’s blog post.
    – Jasmine N. Hall

    Northouse, P.G. (2016). Leadership: Theory and practice (7th ed.). Thousand Oaks, CA: SAGE.

    PSY 533 (2018). Ethical Climate. Retrieved from: https://psu.instructure.com/courses/1896721/pages/l13-arnauds-2010-definition?module_item_id=23792073

  2. Vidar Guerrero April 22, 2018 at 2:20 PM #


    I have been involved with military leadership for close to 16 years now, and one of the biggest leadership lessons is that leaders are supposed to lead by example. Leaders setting the ethical example would fall into this category, so the title you chose was spot on. I believe in leaders setting the example in every way. Depending on leaders action or inaction on certain ethical dilemmas may lead to creating a climate that is tolerant or intolerant of questionable behavior. Victor and Cullen (1987) define ethical work climate as the combination of organizational members’ perceptions regarding ethical events, practices, and procedures (Penn State, 2018). There is a quote that I am not necessarily too fond of but fits this scenario well; perception is the reality. Leaders have a responsibility to set the example through action. I have been in organizations where the perception was that certain unethical behavior was allowed at the leadership levels, so naturally, that unethical behavior became the norm at the lowest levels. Leaders are ultimately not responsible for individual choices, but helping to create an environment of tolerant unethical behavior is something they can attempt to influence.

    PSY 533 (2018). Ethical Climate. Retrieved from https://psu.instructure.com/courses/1896721/pages/l13-victor-and-cullens-1987-definition?module_item_id=23792072

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