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.
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