The Role of Ethics in Modern Business

There I was: Two weeks into leading an organization of about 300 diverse and immensely talented people when the well-known, well-liked maintenance manager walked into my office. He simply asked, “Boss, do you have a few minutes?” I responded in the affirmative and he walked over to my desk, holding a notebook with several color-coded charts. Little did I know the impact that this meeting would have for the next two years as I led the organization. Ethical challenges remain a major factor in leadership. While leading complex or simple organizations, leaders will face the gray areas in decision-making and historically, the ones most prepared mentally to face them tend to do the best when they arise. This article utilizes some personal experience seasoned with some academic support to provide consultative, inspirational, and transformational content for the astute and ethically dedicated leader of today and tomorrow.

Ethical Challenge 1: Finding root cause

What the maintenance manager wanted to show me were the stoplight charts of the past quarter. If you are not familiar with those, they usually show “red” as bad or major areas of concern, “yellow” as minor or impending areas of concern, and “green” as areas meeting or exceeding expectations. In this case, almost all of the areas were green, but one area, on one chart, showed yellow. The maintenance manager began to explain.  

In the last quarter, one of the many metrics they so exhaustively tracked showed an apparent decline in performance. When they started to explore the root cause of the downtick, they found that there had been a “coding” error and the statistics driving them into the yellow in that respective area were, in fact, potentially in the wrong column.  

The maintenance manager simply asked if I cared if they moved the stats, after the fact, into the appropriate column so they would appear green even though the quarterly reports had already been drafted, just not submitted. It was my call – change to coding of the improperly coded items and show “all green” for the quarterly reports or do not allow the change, resulting in a single yellow. Not a big deal … right? The answer here would have been an easy yes, but something didn’t feel right.    I told the maintenance manager to give me some time and let me think about it. He said, “Sure thing, boss,” and then turned to walk out. Something, I don’t know what, suddenly leaped up inside me and I stopped him. “Wait … what led to the coding error?” I asked.

He replied, “We’re not sure, boss, but we’re looking into that.” With that, I asked him to come have a seat, and then I began to ask a bunch of questions. When was this first noticed? Who found the issue? How long from the identification of the error until today’s meeting? Who else knows about this? What is the opinion of those in both the coding and the “yellow” performance area? How has this area performed historically? Then … I kept going.

At the end of a long line of questions, the ethical path became pretty clear. With that, I informed the manager that we would leave it yellow and they would report at the upcoming staff meeting the source of the coding error and how they planned on fixing it and making sure it did not happen again nor potentially affect other reportable areas.

Ethical Challenge 2: Setting the tone

As a leader, you set the tone. You will be tested. Ethical dilemmas abound within organizations, and the slippery slope is often summarized with “the chains of compromise are too small to be noticed until they are too strong to be broken.” In this regard, whether you are a new leader, a midlevel leader, or an older, well-established leader, it is never too late to reassess your ethical trajectory and chart a path to a more holistic focus on ethically oriented processes and a more stable moral culture.

Principle-focused leadership

One way that you can create a more ethical environment and positive organizational culture is to focus on principles versus a more myopic view and handling of individual situations and circumstances. While each dilemma probably does not lend itself to a cookie-cutter approach for solutions, sticking with principles and solid concepts will lend predictability and stability to almost any ethical climate.

A common impact of principle-focused versus situationally focused leadership is what I will call “ethical stability.” When a leader consistently makes decisions based on principles – even when superiors, peers, and subordinates may not agree with the decision – they at least know the steady mindset behind the decision. When this occurs, the sphere of influence around the leader becomes predictably more stable. Gray areas tend to become either more white or black and previously confusing decision matrices seem to almost magically attain new levels of clarity. This approach is invaluable when setting a more ethical tone in an organization.

Similarly, over time and with experience, the more principle-focused leader develops a reputation for fairness and level-headed style. In addition to ethical stability in the work environment alone, this kind of leader becomes more trustworthy and relationships, which depend upon trust and mutual respect, become easier to establish and maintain. This elevated trust, in turn, produces a richer, more authentic leadership style.

The positive second- and third-order effects of this style are not difficult to imagine. Social gatherings become less awkward. Rule-breaking and pushing the edges dissolve as more wholesome behaviors are encouraged, reinforced, and possibly even rewarded. The Golden Rule of “do unto others as you would have them do unto you” becomes a way of doing business and with it comes the comfortable feelings of belonging and higher purpose.

Yes, it’s possible!

Leaders who make significant efforts to increase the ethical climate of their organizations are usually only scoffed by those somehow benefiting from the lack of moral compass. Those who take an easier road for reports or for easing their own personal workload often cut corners because “that’s how it’s always been done” and/or “what’s wrong with the way we are doing it now? It’s worked for years” mindsets.

Regardless of the “why” in the historical lapses, paving the path to a renewed set of values and potentially cleaning up the act around your workplace has multiple positive outcomes. Primarily, heightened levels of ethical conduct build trust in the entire leadership team. Like building trust in one-on-one relationships, the level of holistic trust of subordinates towards the leadership team increases and produces positive outcomes. When employees, as a group, have increased trust in the ethical climate of the organization’s leadership team, increases in performance, safety, and camaraderie almost always follow.  

Add to this honesty and forthright approaches to often whimsical markets and personnel challenges, and the importance of ethics and morality increase. Perturbations will exist and ethical dilemmas will arise in the most stable of business environments. The astute leader, however, keeps the desired end state in mind and in focus at all times because they know. In the end, it will be worth it! Ethically sound leaders take solace in areas where nonethically performing people often waver and fall. I guess you could say leaders with solid ethics usually sleep better, knowing their decisions, while maybe not perfect, are at least legal, easily supported, and less controversial – at least, that’s what I learned.

Ethical Challenge 3: Encouraging and sustaining ethical operations

Ethical dilemmas are coming! You must be ready. Whether they show up in the form of colored charts, financial dealings, travel rules, expense reports, or a host of other areas, they WILL show up. So, how should you, as the leader, prepare to address them?

Transforming your organization into an ethically focused, highly regarded, morally sound entity is not for the faint of heart. If you are new to leadership and/or management, stay strong! Every decision you make today can enable a more ethical trajectory for the entire organization.

The advantage here is that you may be a relative unknown to the established employees. Usually, those on the edge of ethical behavior do not come right out and ask the new guy about the deeper ethical issues orbiting the office or manufacturing floor, but they might. A potential disadvantage could be the lack of relationship, hence trust, with the unknown new leader. Taking both this cursory look at an advantage plus a potential disadvantage should spell one thing: opportunity.  As the new leader, look for the most ethically sound solution in every decision. Consider alternative courses of action and let your decision-making processes be transparent. This breeds a sense of authenticity while also allowing folks inside your head – hopefully on the ethical train of thought.

As people see how you think and operate, they will understand what pleases their supervisor and will hopefully begin to emulate that thought process along the way. If you are a midlevel leader, you can still lead an evolution to a more ethically sound organization by operating with conviction and a dedicated ethical mindset. For your subordinates, in addition to using the techniques given above to the new leader, add in some ideas and mental exercises to leverage your influence and heightened credibility.

Become an expert in the “why” of the company and ensure the vision of your superiors is being met in the most ethical of ways. Ask a lot of questions to your superiors about tasks and desired outcomes. Professionally, respectfully, and courteously view and then voice potential ethical pitfalls or morally lacking perspectives. This could be painful at first, but over time, your subordinates will admire your knack for finding upright and ethical ways to do things while your superiors should begin to appreciate your concern for their, and the organization’s, reputation. If they don’t recognize your intentions and efforts from above and below, it may be time to reevaluate your position and even look for more moral opportunities.

Finally, if you are at the higher ranks or in an executive-level position, you have amazing influence and can rapidly shift the tectonic plates of the gray area into a more easily adapted ethical mindset and moral compass. Renewed vision casting, new employee core values, and similar items can demonstrate a desire to bolster an ethical foundation and prevent potential pitfalls. However, words only matter if actions truly support them. Remember new mission and/or vision statements are powerful tools – but, these well stated intentions must be met with decisive, and ethical, actions.


Ethical dilemmas have existed since the earliest recorded history of mankind. Ancient philosophers struggled and modern-day thought leaders continue to struggle with understanding ethical and moral conduct. Their thoughts/opinions span the full spectrum of “nature versus nurture” and whether these ethical leaders are “born or made.” In this light, leaders, either born or made, eventually steer their organizations through these dilemmas utilizing a complicated calculus. This calculus contains factors and complex algorithms of logic, thought, ethics, and morals. The eventual result of this calculus determines the ethical trajectory of the leader and their organizations. Do not be in denial – As a leader, you will face ethical decisions. What you choose, and probably more important how you choose, will determine your reputation as a “straight shooter” and may also deter ethical and moral challenges from even reaching your particular leadership level – because your supervisors, peers, and subordinates will already know acceptable versus unacceptable courses of action.    Back to the case of the maintenance manager: he and I are still good friends. His specific sub-organization has flourished under his leadership and through natural disasters, contractual challenges, and a host of other obstacles – he remains a loyal, ethical, and all around wonderful human being. As a leader, he already had the DNA and qualities to be even more solid, he just had not tapped into that vein of his character like he did when we started working together. In essence, he made me a more ethical leader by proving me right in our moral and ethical decision making and I made him understand the rewards that come to those who do things excellently and in an ethical way. The role of ethics in the 21st Century remains an integral aspect of leadership.  

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