Driving Business Success through Ethical Leadership

by | Mar 25, 2024 | Diversity of Thought, Leadership Matters, Sustainability

Ethical leadership is not something that, at first appearance, features much in today’s world.  Whether that be failing CEOs’ bonuses, or dubious PPE contracts, there is not much that shouts “morals” in our news feeds.  However, that’s not the whole picture; it’s just the noisiest.  Public hunger for a cleaned-up leadership act in public life is starting to spill over into the business environment.  In that context, ethical leadership isn’t just a moral compass; it’s a strategic advantage.

With increasing dissatisfaction over unethical behaviour, consumers are recognising the importance of ethics and values in their purchasing decision-making.  That means, in turn, that business leaders are starting to recognise the role of ethics and values in driving profitability and differentiation in the market. Let’s explore how prioritising ethical leadership can positively impact a company’s bottom line and set it apart from the competition.

Ethical leadership has the potential to play a crucial role in enhancing a company’s reputation and attracting customers who align with its values. Consumers today are more socially conscious and ethically minded, preferring to support businesses that prioritise ethical behaviour.  And, we have to note here, that is genuine ethical behaviour.  There is the issue of “-washing” (e.g. “greenwashing” using climate-aware values as cynical camouflage for the same old exploitative practices dressed up with minimal value-aligned gestures).  This has resulted in the global boycotting of certain brands because of  the lack of morality.  In turn, this shows us that consumers wield a lot of power.  On the other hand, by demonstrating a true and transparent commitment to values-based practices, companies can build trust and loyalty among customers.  That will drive sales and growth. [The whole issue of whether traditional economic models in pursuit of growth and consumption is viable, is another issue.  I would urge you to review Doughnut Economics for this very different perspective.]

 

Ethical Leadership in the workplace – talent attraction

Ethical, trustworthy behaviour fosters a positive organisational culture too.  Cultures like this attract and retain top talent; few employers of choice are unprincipled and exploitative these days. Ethical leaders create environments of trust, transparency, and accountability, leading to higher employee engagement and productivity.  Reduced turnover costs further contribute to the company’s bottom line.  In this way, ethical leadership is not only morally sound but also financially prudent.

As the next generation of leaders emerges, there’s a growing demand for more ethical and values-based leadership. Employees want to work for companies that align with their values and principles, more than ever before.  Millennials and Gen Z leaders are rejecting the profit-driven mindset of previous generations.  This means seeking to operate in a way that aligns with their personal values.  Businesses that embrace this shift and prioritise ethical leadership will attract top talent and position themselves for long-term success in a changing world.

 

Ethical Leadership in the workplace – talent retention

In another blog, I have addressed the issue of people leaving bad managers.  Ensuring that your company operates according to a clear ethical framework, centring around ethical leadership principles, is a great way to prevent this.  A clear leadership behavioural framework sets parameters which make it straightforward to comply, for any manager wanting to do the right thing the right way.  Introducing these frameworks is a joyful part of my work.  It is incredibly rewarding, to introduce a values-based management approach and see the difference it makes to how people enjoy their own work too.

Furthermore, ethical leadership drives innovation and creativity within organisations. Leaders who operate from an ethical stance are more open to diverse perspectives and innovative solutions.  Such solutions will be more inclusive of the diverse talent within an organisation.  It is also probable that the solutions will benefit a wider section of the marketplace too. This innovative mindset can lead to the development of new products or services.  In turn, this can open up new market opportunities and even offer the company a competitive edge.  This competitive edge can also apply to the recruitment market.  The best people will want to work for the best companies.  They are likely to define “best” as good terms and conditions, for sure, but also leaders who walk the talk and behave in a manner which is appropriate, fair and principled.  “Best” will also cover inclusive workplaces, where decision-making is informed by a wide range of viewpoints and where difference is encouraged and welcomed.

 

Stand out from the crowd

In any competitive marketplace, ethical leadership will serve as a powerful differentiator. Sadly, it is still all too rare for it to be a genuine factor.  However, it is becoming clear that companies that prioritise ethics and values do stand out from the crowd, for all the right reasons.  By building stronger relationships with customers and stakeholders, such businesses build brand loyalty, turning customers into advocates for their products and even for the change in the world that their ethical stance supports.  Companies such as Patagonia exemplify this approach.  Consumers are increasingly choosing to support businesses that share their ethical principles.  And, increasingly, those ethical principles include pricing.  Making ethical buying choices are less and less the preserve of the affluent, as values-based business also includes accessibility.

 

In conclusion, ethical leadership isn’t just the right thing to do; it’s also a wise business strategy. By prioritising ethics and values, companies have the opportunity to steal a march on their less-principled competition.  They enhance their reputation, attract customers and talent, differentiate themselves in the market, and ultimately drive profitability. The business world is waking up to the public attitude for a more moral marketplace.  Those who adapt first, by embracing ethical leadership, will be those who thrive in tomorrow’s market.