If you are or see yourself as a future leader, the term “leadership” must have triggered a certain number of thoughts in your mind, and I am not an exception. In preparing myself for becoming a leader in the FMCG industry, a series of several blogs will be dedicated to exploring different aspects of leadership and reflecting on my own leadership journey, which hopefully will be useful for those of you who share the same career passion as mine.
Ethical leadership – The ‘Why’
“Ethics lies at the heart of all human relationships and hence at the heart of the relationship between leaders and followers” (Ciulla 2004: xv)
Talking about leadership, I would like to dedicate this first blog to ethics in leadership – an aspect that is already important to any individual, and even more crucial to leaders (Ciulla 2004). Especially when it comes to the FMCG industry where I am determined to become a manager in, it is probably vital for leaders to be ethical and make ethical decisions because FMCG products affect people’s lives on a daily basis.
This blog will firstly introduce the concept, the two perspectives and a model of ethical leadership; followed by examining the impacts of ethical and unethical leadership on individuals and organisations with real examples of FMCG managers.
Definition of ethical leadership
For those who are new to the term ‘ethical leadership’, the following definition may help:
“Ethical Leadership is the demonstration of normatively appropriate conduct through personal actions and interpersonal relationships, and the promotion of such conduct to followers through two-way communication, reinforcement and decision-making”… [and] the evidence suggests that ethical leader behavior can have important positive effects on both individual and organizational effectiveness” (Brown, Treviño, and Harrison 2005: 120).
From the definition, ethical leadership is firstly the leaders’ demonstration of a set of standard values and beliefs (normatively appropriate conduct) through their own actions and interactions with others. Secondly, ethical leadership involves the leaders making their employees demonstrate the same conduct by ‘selling’ the ideas to them and let them have their own voice (two-way communication); having rewards policies and disciplines (reinforcement); and making ethical decisions.
Perspectives of ethics
For application of ethics in leaders’ decision-making, two perspectives of deontological and teleological ethics will be introduced. According to BBC (2014), teleological approach includes 2 principles:
- Whether an act is ethical or not depends only on its consequences
- If an act produces more good consequences than another, it is more ethical.
Leaders taking teleological perspective predict potential consequences of decisions, then choose the act with maximum good consequences. For example, when a subordinate is not eligible for a promotion, a teleological leader may choose to make up another reason for refusal in order not to demotivate the person, even though normally telling lies is a bad thing.
(Kaplan Financial 2012)
Meanwhile, deontological approach believes:
- Whether an act is ethical or not depends on the nature of the act itself
- Acts are ethical or unethical in themselves, regardless of their consequences.
This perspective suggests that leaders consider what action is right, and only do the right thing. If the manager in the example above follows deontological principles, he will definitely choose to tell his subordinate the truth.
Not surprisingly, both perspectives have two sides. While it is good that leaders examine possible consequences when deciding, teleological approach can be problematic because it is hard to predict future consequences and compare the goodness of different possible results (BBC 2014). Although deontological perspective provides clear guidance for decision-making, its absolutism may not be useful for complicated situations (BBC 2014).
A model of ethical leadership
Northouse (2013) introduced 5 principles of respect, service, justice, honesty and community, providing a model for developing ethical leadership.
(Northouse 2013)
The model suggests that ethical leaders respect other people’s values, beliefs and decisions; serve their people by prioritising staff welfare becoming stewards of the organisation’s vision; treat all of their followers equally and fairly; tell the truth and stay authentic to others; and are concerned with the common good of society.
A perfect example of an ethical FMCG leader who satisfies all these principles is Paul Polman – CEO of Unilever – a giant FMCG conglomerate. He shows his respect and fairness when spending time interviewing entry-level candidates; and stating that leadership is not about himself but about service to others (Cunningham 2015).
“It is not about yourself. If you are fortunate enough to be in our position, you probably belong to the 2 percent of the world population that is well educated, financially independent, can do what they want, can live and work where they want. If you belong to that 2 percent, then it is your duty to put yourself to the service to the other 98.” (Cunningham 2015)
He contributes to the community by setting the Unilever Sustainable Living Plan (Boynton 2015); while honestly admitted that he could not make it happen alone without the contribution of all Unilever staff (Confino 2013).
Paul Polman
Impacts of ethical leadership on individual and organizational effectivesness
Rubin et al (2010) found out that leaders’ ethical behaviours result in increased pay fairness and group citizenship behaviours, thus improving employees’ satisfaction and performance. To organisations, ethical leadership creates a trusting and fair environment (Xu, Loi and Ngo 2016), and likely leads to a ‘clean’ reputation and profits (Makris and Rowe 2015). This is proved by how Paul Polman’s ethical leadership influenced Unilever. Despite volatile business environment, Unilever delivered 4.1% underlying sales growth in 2015 (Unilever 2016) and ranked the 9th Best place to work in the UK in 2016 (Glassdoor 2016).
Meanwhile, unethical leadership can lead to increased employees’ unethical work behavior; decreased productivity; bad brand image and even the end organisations (Brown and Mitchell 2010). For example, William Pinckney – CEO of Amway India, an FMCG direct-selling giant – was arrested in 2014 for unethical circulation of money, which badly affected the company’s reputation (The Times of India 2014).
William Pinckney
Conclusion and recommendations
This blog has touched on the Why, What, How, and What If of ethical leadership with real examples in FMCG industry. To become an ethical leader who drives organisations’ success, one is recommended to both act ethically and promote ethics to his subordinates; make flexible use of deontological and teleological perspectives in decision making; and follow the 5 principles suggested by Northouse.
References
BBC (2014) Consequentialism [online] available from <http://www.bbc.co.uk/ethics/introduction/consequentialism_1.shtml [06 June 2016]
BBC (2014) Duty-based ethics [online] available from <http://www.bbc.co.uk/ethics/introduction/duty_1.shtml> [06 June 2016]
Boynton, A. (2015) Unilever’s Paul Polman: CEOs Can’t Be ‘Slaves’ To Shareholders [online] available from <http://www.forbes.com/sites/andyboynton/2015/07/20/unilevers-paul-polman-ceos-cant-be-slaves-to-shareholders/#3a378fdf40b5> [06 June 2016]
Brown, M. and Mitchell, M. (2010) ‘Ethical and Unethical Leadership: Exploring New Avenues for Future Research’, Business Ethics Quarterly, 20(4), 583-616.
Brown, M., Treviño, L., and Harrison, D. (2005) ‘Ethical leadership: A social learning perspective for construct development and testing’ Organizational Behavior and Human Decision Processes, 97, 117-134.
Ciulla, J. (2004) Ethics, the Heart of Leadership. 2nd edn. USA: Praeger
Confino, J. (2013) Interview: Unilever’s Paul Polman on diversity, purpose and profits [online] available from < http://www.theguardian.com/sustainable-business/unilver-ceo-paul-polman-purpose-profits [06 June 2016]
Cunningham, L. (2015) The tao of Paul Polman [online] available from <https://www.washingtonpost.com/news/on-leadership/wp/2015/05/21/the-tao-of-paul-polman/> [06 June 2016]
Glassdoor (2016) Best Places to Work [online] available from <https://www.glassdoor.co.uk/Award/Best-Places-to-Work-UK-LST_KQ0,22.htm> [06 June 2016]
Kaplan Financial (2012) Ethical theories [online] available from <http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Ethical%20theories.aspx [06 June 2016]
Makris, N. and Rowe, W. (2015) ‘Ethical Leadership Then and Now’, Ivey Business Journal, 9-11.
Northouse, P. (2013) Leadership : Theory and practice. 6th edn. Thousand Oaks, CA: SAGE Publications.
The Times of India (2014) Amway India CEO William S Pinckney arrested [online] available from < http://timesofindia.indiatimes.com/business/india-business/Amway-India-CEO-William-S-Pinckney-arrested/articleshow/35627169.cms [06 June 2016]
Unilever (2016) Annual Report and Accounts Overview [online] available from <https://www.unilever.com/investor-relations/annual-report-and-accounts/> [06 June 2016]
Xu, A., Loi, R. and Ngo, H. (2016) ‘Ethical Leadership Behavior and Employee Justice Perceptions: The Mediating Role of Trust in Organization’ Journal of Business Ethics, 134 (3) ,493-504.
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