Table of Contents
Overview of the Case Study
The case study provides intricate details on how corporate scandals involving top executives or any other members of the company directly end up affecting the image of the company as well as employees who were not embroiled into any of the issues. The case study serves to provide various examples of leaders who have been entangled in ethical issues in the company, and the overall effect they have on the company. An example provides the feelings of the company’s employees after the top leadership of the company was involved in financial misappropriation. Employees already expressed some form of deep-seated anger in various company forums where they felt the effect of the company leadership failed them at a specific point (Molinaro, 2014). In addition, potential employees indicated that they were not willing to work for the company due to its bad reputation, and some even claimed that they were disappointed in the company. Moreover, the company leaders who did not engage in any of the ethical issues also cherished resentment over the company since their image was tainted by the bad reputation of some executives. Consequently, the trust levels eroded within the company, and its reputation was hugely affected as the top leaders of the company solely messed up some fundamental processes.
However, lost business goodwill is not the only negative consequence that ensures ethical misconduct. According to the case study, low-ranking employees are heavily affected by any form of corporate scandal as compared to other workers of the organization (Molinaro, 2014). This issue has been described as the moral spillover effect. The moral spillover was caused by self-serving, unethical issues, including looking for a bigger bonus, presenting self-serving lies, and lying to clients to increase an organizations revenue (Molinaro, 2014). Because of such malicious actions, employees of lower rank would be viewed negatively within the company even if they were not directly involved in any of the ethical issues presented above.
Moreover, the spillover effect was stronger when leaders of the company were directly involved in the unethical practice of misappropriating the company’s resources. Employees of such companies are likely not to be employed in other organizations because of the negative view of the company to the external environment (Molinaro, 2014). It is therefore important for all employees working in these organizations to be whistleblowers in case of any ethical issues noticed in the company (Molinaro, 2014). Failure to articulate such issues would result in the moral spillover effect to the employees, which negatively affects them from any position within the company.
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Ethical leadership outlines the key principles to be followed after numerous companies have tarnished their reputation. The collapse of Enron and Lehman Brothers summarizes the events occurring in the majority of financial institutions across the world (Selig, 2011). Other companies associated with unethical practices include Shell Nigeria, where ethical issues resulted in environmental disasters, and companies such as Nike which chief executive officers were implicated in ethical misconduct (Monahan, 2012). The lack of ethical leadership is directly attributed to financial stress in most organizations across the globe. In addition, it could be relevant to what is happening or what happened in the case study described above. Immediately such organizations choose to restructure their strategy on ethical leadership, there is a higher chance that they would improve their position (Maak & Pless, 2006). Practically, the most serious problem that numerous companies face today is the lack of ethical leadership. It may provide information or clues on why the top leadership of the company may choose to indulge in unethical leadership without monitoring the negative effects it has on other employees as well as on the company in general.
Leaders are supposed to be at the forefront in taking care of the employees’ needs based on strict adherence to ethical issues. They are required to have a specific vision for the organization so that it meets the objectives of the company. Leaders act in a complex environment which is interconnected with numerous issues, including how the company is viewed both internally and externally (Ciulla, 1995). The actions of the leaders are in most cases regarded as the ones of the entire company. If leaders perform wrongfully, the whole company is viewed to have engaged in a negative act. The employees of the company are not spared from this form of negative publicity even if they did not engage in any acts. Public trust is essential in ensuring that companies are viewed positively. Leaders are tasked with ensuring that companies are regarded secure. In the case study presented above, the leaders of the organization were implicated in slowly destroying the image of the company in engaging in numerous unethical practices (Monahan, 2012). Such leaders disregard the vision of the company in the process, damaging its brand image as well as the employees who might have not directly or indirectly engaged in any unethical practice within the organization.
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Therefore, a qualified leader is supposed to possess certain virtues. Plato had defined the required traits of anyone who aspires to be a leader to achieve the needs of an organization (Maak & Pless, 2006). Plato states that unique leaders seek to focus on the long-term interests of an organization as compared to the personal self-interests which are short-lived and self-fulfilling. Whereas self-sacrifice may be important to a specific individual, practicing aspects related to morality have a higher calling to leaders. In this case, leadership becomes less concerned with the issues dealing with altruism, and it focuses on aspects related to morality. Good leaders are described in this case as individuals who put the interests of their follower’s fist before anything else and are not willing to place any price tag on this unconditional offer (James, 2000; Monahan, 2012). However, nowadays people are interested in taking leadership position without the due knowledge or facts of what it actually takes for an individual to be classified as a leader (James, 2000). Consequently, they engage in different behaviors aimed at fulfilling their self-interest goals at the expense of organizational ones.
If the company`s management from the case study was knowledgeable of fundamental leadership principles, the damage to the company`s goodwill as well as to its employees could have been prevented. The reason is that the practice of leadership would require them to take into consideration the aspirations, causes, goals, and missions of the group before choosing to engage in any other self-fulfilling activity (Monahan, 2012). Thus, self-interested individuals are less likely to put the perspectives of other people at hand and cannot be considered as effective leaders. Appreciating the interests of other employees in an organization relates to morality and ethical aspects of leadership. The key underlying issue, in this case, is that leadership effectiveness is dependent on the practices of a leader. For example, if the leaders of an organization fail to take into account the interest of the company, both the brand image of the company and employees, they should be considered not only as ineffective but also as unethical ones (James, 2000; Monahan, 2012). If they look at the interests of the community, they are considered as altruistic because of the manner in which they manage the entire organization. Specific attributes such as altruism illustrate the role of leaders in the context of ethical leadership and effectiveness. In essence, leaders who show any traits associated with self-interest are known to be driven by greed, system failure, and negligence (Selig, 2011). Having such individuals at the top echelons of any company is dangerous as they might slowly lead to the crumbling of the organization.
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Role of Leaders in Solving Ethical Issues
Leaders are tasked with the sole responsibility of addressing any ethical issue that arises in the company. First, they are required to develop specific cultures within the workplace that promote ethical practice at all costs. This ethical culture is not supposed to be dependent on specific types of leadership though in the recent past, there has been an indication of an association between the leadership style and the ethical practice (Bass, 1997). For example, transformational leaders within the organization are known to inspire their followers or employees to higher standards. In case the transformational leaders are caught up with the scandal associated with unethical practice, it negatively affects the whole company as well as the followers who had placed their hopes in such an individual. In such cases, each of the different leadership styles may directly or indirectly affect the conduct of the leader. Nonetheless, leaders are supposed to be at the forefront in ensuring their actions are unquestionable and of high standards. Transformational leadership lacked in the case study described above. Its presence ensures that certain behaviors are not practiced by leaders.
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Leaders and managers at the various workplaces can also promote ethical activity by focusing on individual and organizational structure. In case of the former, they are supposed to ensure that ethical sensitivity and moral development of individual’s followers are dealt with using different approaches (Maak & Pless, 2006). These aspects largely concern the interior motives of the employees and focus less on the situational challenges that may tempt employees in engaging in unethical behaviors. In essence, it means that employees as well as leaders should be aware of all ethical standards associated with the company. It means that all employees, including leaders, should be aware of the company policies and practices that are considered unethical (James, 2000; Maak & Pless, 2006). If employees do not understand some of the details, leaders are supposed to be at the forefront in providing the required information on ethical issues. In the case study described above, leaders and employees behaved as if they had no information regarding how to manage the ethical issues.
Moreover, leaders could also opt to strengthen the organizational structure. In such cases, leaders would believe that individual behavior is commonly motivated by numerous external factors, including organizational rewards, environmental conditions, and corporate culture (James, 2000; Maak & Pless, 2006). In case employees are poorly remunerated, there are increased possibilities of them engaging in unethical practices as an excuse for the poor remuneration. Therefore, it would be appropriate for the leader to ensure that all employees are remunerated properly based on their work roles and responsibilities. In other cases, the working environment and the corporate culture may lack ethical regulations or implementation of specific rules and regulations that monitor and deal with all ethical issues. Consequently, the employees, including the leaders, may be free to engage in unethical practices such as financial impropriety and continue working without any charges. Therefore, such actions motive other employees within the organization to perform in a similar manner since they do not expect any form of action from the management. Thus, leaders should strengthen all key institutions in their workplaces, including those investigating ethical issues. Quality control measures and internal audits should be considered within the organization to determine the effectiveness of some of the division tasked with monitoring ethical issues (James, 2000; Maak & Pless, 2006). Moreover, responsible leaders should understand their roles as servants, coaches, change agents, and stewards within the organization. At the same time, they should include all the other stakeholders in dealing with ethical issues that commonly arise within institutional settings and help in the setting up of divisions that protect employees who directly or indirectly report unethical behavior or practices.
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The case study serves to provide intricate details on how leaders and other employees are affected by the selfish, unethical interest of their colleagues. Overall, leaders engaging in unethical practices damage the image of the company and the employees associated with the organization through the mechanism referred to as the spillover effect. The effect is more pronounced for employees in the lower ranks. Leaders have a role in promoting ethical practices in their workplace by looking at their behavior, identifying the individual goals as well as the organizational structure. Therefore, ethical leadership must be an inherent element of any organizational structure.