Business Sustainability, Corporate Governance, and Organizational Ethics

CHAPTER 30Ethical Leadership

1. Introduction

The wave of financial scandals at the turn of the 21st century and the 2007–2009 global financial crisis were partially caused by a number of ethical lapses made by both organizations and individuals involved in financial reporting. These lapses collectively contributed to the financial crisis and resulted in the global economic meltdown that threatened the well-being of individuals, the sustainability of businesses, and the viability of governments. The crisis and related financial scandals have caused policymakers, regulators, and ethics advocates to question the extent corporate culture affects the business process. This final chapter in the ethics module covers the prospect of doing better than mere compliance. If we believe that we can all aim higher, and as a result become role models of ethics to others, a new set of considerations come into play. This is a chapter about the conditions under which some people and their companies will lead the rest of us toward more social responsibility. The plan of this chapter is to first establish what leadership means. The organization chart provides the interactions between leaders and followers within the organization.

Learning Objectives

• Identify the characteristics required of an ethical leader and understand how those characteristics materialize.
• Recognize that circumstances requiring leadership are not problems but opportunities for improvement.
• Understand the psychological contract ...