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What Is the Relationship between Business Ethics and Leadership?

Esther Ejim

Last Modified Date: February 10, 2024

The relationship between business ethics and leadership is derived from the manner in which the ethical stance of leaders in business environments is related to their brand of leadership. Ethics and leadership in the corporate world is a broad concept that encompasses a wide range of scenarios, all of which impact the way in which a business leader makes decisions. Such ethical consideration include factors like the manner in which the leader relates with the employees, the organizational culture in the organization, the relationship between the company and clients or customers, and decisions regarding finances and other forms of business deals.

One of the more prominent considerations in the discussion of the relationship between business ethics and leadership is the way in which the leader responds when he or she is faced with business deals that might be viewed as unethical. An example of such a situation is where the owner of a jewelry store is approached with diamonds that were obtained under questionable circumstances at a fraction of the price on the open market. The link between business ethics and leadership will come into play as it will determine the action that the business leader in this situation will take. Most times, ethical considerations are just related to issues of what are considered fundamentally wrong or right, since they often do not involve the breaking of any law.

How the leader of a company relates with the company's clients is an important part of the connection between business ethics and leadership.

One connection between business ethics and leadership can be seen in the relationship between a business leader and employees. For example, a business man might have a perfectly good secretary whom he might decide to transfer to another department, or even fire, in order to hire an attractive new applicant. If the business leader transfers the secretary to another department within the organization, the leader has not broken the law, but such a treatment might foster resentment among the employees who are treated in such a shabby manner.

Ethical considerations can arise in situations involving the manner in which a business leader relates with employees.

Another application of business ethics and leadership involves the way in which the business leader relates to customers. Such considerations include taking into consideration the feelings of the customers as well contributing to the welfare of the community and members of the community. For instance, if the consumers are against the testing of products on animals, an ethical leader would look for other ways of conducting product tests. Also, the business leader would show responsible leadership by taking care not to contribute to unnecessary environmental pollution as well as sponsoring projects aimed at the development of the host community.

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Discussion Comments

discographer

January 17, 2012

@feruze-- I agree with you. That example just seems like a smart business practice to me. There is no place for emotions in business. You have to do what's best for the company.

I think the most unethical (and illegal) thing a business leader can engage in is embezzlement of funds. This happens all the time in large international businesses where millions of dollars move in and out of company accounts daily. Leaders often feel that they can easily embezzle funds and guarantee their future without anyone noticing. Of course, they almost always get caught sooner or later.

This is outright theft and it has to be the worst thing that a business leader can possibly do.

bear78

January 17, 2012

I thought that business ethics meant that the law wasn't broken in any way. It didn't occur to me that leaders can be unethical even when they abide by the law.

When it comes to being fair to employees and such, I don't really think that ethics has anything to do with it. A business' job is to make money and it should do whatever is necessary to further this goal as long as it doesn't break the law.

I don't think that there is anything unethical about replacing an employee with a better one. If the new employee is going to be more beneficial to the business, it would be foolish not to hire them. I still think that this is all okay as long as it doesn't infringe on anyone's legal rights.

candyquilt

January 17, 2012

I think having business ethics is what makes good leadership. Unfortunately, business ethics does not always translate into high profits in today's world. And that's why leadership might find it acceptable to engage in unethical practices as long as it doesn't harm their business.

I saw an example of this recently with a product I was using. The product was sold labeled as organic and cruelty free but one of the ingredients was emu oil which is taken from emu birds. I didn't know whether emu birds are harmed in this process or not but I did some reading on it and then contacted the company about the emu oil they were using.

It turns out that the emu oil was taken through a process where emu birds are killed. I'm sure the company was very much aware of this but didn't mind since customers had not yet found out. Soon after this incident, there was an email from this brand saying that they would no longer be selling this product which contains emu oil.

So this is business ethics. It's about being honest at what you do and if there are mistakes, at least taking responsibility for them and working to make them right.

I was upset with the leadership of the company for deceiving its customers. But I do respect them and think that they showed good leadership by pulling the product off their product list.