What is Ethical Leadership and Why is it Important?

The Center for Ethical Leadership put it best when they said, “Ethical leadership is knowing your core values and having the courage to live them in all parts of your life in service of the common good.” Here are twelve different ways ethical leadership can make a positive impact on a business and why it’s so important.

1. Evoke Confidence in Potential Investors

Conducting business in an ethical manner is one surefire way to achieve growth and success. Catching the eye of potential investors and valuable prospects is just one of the payoffs of ethical leadership.

If you set a clear standard for ethical business practices, you’re sure to inspire confidence in your potential investors.

2. Build Customer Loyalty

Consumerism has evolved in a way that highlights the values and ethics of a business in addition to the goods and services it provides.

The overall morality of a company has the power to make or break its brand identity. If you exemplify characteristics of ethical leadership in everything you do, the word is sure to spread that you’re a well-intentioned company striving to improve our world in one way or another.

3. More Freedom and Less Micromanagement

Ethical leadership gives you the power to create a workplace community in which employees can be trusted to do their jobs without being micromanaged. Setting an inspiring example and laying the groundwork for a self-motivated team will save you a great deal of time and money in the long run.

4. Good Press

When companies reach a certain level of moral misconduct, word spreads like wildfire, social-media smear campaigns are shared across various networks, and the company receives a great deal of poor public press.

Don’t make the mistake of destroying your brand’s good name through immoral management practices.

5. Establish Trust in Partners and Vendors

In order to operate smoothly and be successful, businesses need a broad network of trusted partners and reliable suppliers.

By practicing ethical leadership, you can attract partners and vendors who share your beliefs and collaboratively build a dependable foundation of mutual trust and respect. On the flip side, immoral practices will likely attract immoral partners and suppliers, which won’t end well for you (or anyone else).

6. Keep Morale High and Boost Performance

The performance of your employees is a crucial component of the success or failure of your business. Being an ethical leader means inspiring, motivating, and holding employees to a certain standard of integrity and accountability. In doing so, you can powerfully boost employee performance by keeping the team’s morale high.

Review CMOE's Employee Development and help your employees reach their full potential with driven performance objectives.

7. Safe Legal Practices

If making ethical decisions in everything you say and do becomes a habit, it will be easy for you to run your business in a way that is not only inspiring to others but also completely legal.

By setting a high standard for yourself and how you conduct your business, you’ll avoid causing legal complications for yourself down the road.

8. Self-Satisfaction

This one may seem a little contradictory, but just hear us out. Ethical leadership is certainly centered around uplifting others and making decisions that can benefit the greater good, but this selfless behavior can also be incredibly personally satisfying. Manage your team the right way and feel good doing it—what could be better?

9. A Healthier Workplace Environment

Nobody wants to get up in the morning and go to work in a place that smacks of negativity and operates through shady decision-making and questionable behavior. Use the power of ethical leadership to create a better workplace environment—one where your team feels valued, comfortable, and inspired to be their best selves.

10. Attract Better Employees

Immoral practices will likely attract immoral employees into your workplace. This can result in a myriad of different problems for you, one of the most common being employee theft.

Make it clear to current and potential employees that you conduct your business under a strict code of ethics and remove team members who fail to reach those standards.

11. Improve Other Aspects of Your Life

Ethical leadership is so much more than how you act in the office; it’s about how you live your life.

If you make incorporating the art of ethical leadership into your daily routine a priority inside and outside of the office, you’re sure to improve other aspects of your life by making better decisions, conveying a more generous attitude, and demonstrating a desire to improve and inspire the world around you.

12. Build Good Habits That Last

Why is ethical leadership so important? For one thing, making a conscious effort to be an ethical leader will surely carry over into other parts of your life, helping you to build great habits that last over time.

By refusing to engage in immoral behavior and practicing moral and ethical leadership, you can create a strong basis of good behavior that will influence the rest of the decisions you make throughout your life.

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About the Author
CMOE’s Design Team is comprised of individuals with diverse and complementary strengths, talents, education, and experience who have come together to bring a unique service to CMOE’s clients. Our team has a rich depth of knowledge, holding advanced degrees in areas such as business management, psychology, communication, human resource management, organizational development, and sociology.

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