Ethical leadership, defining it as “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 behaviour can have important positive effects on both individual and organizational effectiveness (Rubin et al 2010: 216-17).
This blog seeks to evaluate the above statement through exploring whether ethical leadership matters, whether the actions of leaders in implementing ethical approaches matters and the impact of such approaches. The blog intends to provide an insight to the hospitality manger of the importance of taking an ethical approach to business.
Does Ethical Leadership Matter?
Ethical leadership, the CIPD suggests, has emerged since the 2008 financial crises, and centres on the ‘possession of certain core values alongside a sense of purpose’ (CIPD 2014). Muir cited by Newcombe (2014) states ethics is about ‘culture, leadership, values and principles’. Both authors suggest leadership is integral to an ethical approach by organisations. They also cite values as a contributory factor, which suggests the belief is that the ethical approach of organisations can be directly influenced by the values displayed by its leaders.
Knights (2014) brings it all together by suggesting “the main role of the senior leadership are to provide an ethical and inclusive climate and culture that brings people together around the vision of the organisation”. The message points to ethics being the responsibility of the leader, and is supported by a CIPD survey of 2,918 workers, 15% of whom concluded that demonstrating ethical behaviour is an important attribute for senior managers to possess.
Mullins (2013:676) agrees with the CIPD that business values and ethics have been thrown into the spotlight since the 2008 banking crises, after which many questioned the moral and ethical approach to the risks taken by bankers prior to the crash. Today, an ethical approach to banking is a hot topic, and supported by the CEO of Barclays, who stated last year that “ethics need to come before profits” (Observer 2014). Mullins (2013:677) goes on to suggest ethics not only covers how a business conducts its activities in terms of being judged on whether such activities are ‘good or bad’ but is also embedded in its stance on corporate social responsibility.
In the hospitality industry, huge efforts are made to convince consumers that supplies (especially food) are ‘sustainably sourced’ which is an ethical stance, portraying their CSR in a positive light as it seeks to convey that the business has ‘good’ practices. Tuppen (2013) suggests sourcing ethical food sources in the hotel industry is good, as it shows the company supports disadvantaged producers. Compass Group PLC is among the many hospitality businesses insisting employees sign a ‘code of ethics’ or a ‘code of conduct’ upon employment. The code includes relationships with employees, customers, investors, supplier and subcontractors as well as the wider community, which they believe benefits their overall profit margins. McDonald Hotels (Tuppen 2013) states its ethical trading charter ensures everyone in the supply chain is treated with “honesty, fairness and respect” and therefore provides an expectation of the standards on which they can be judged as they conduct their business.
Why do Leaders believe that Personal Actions and Interpersonal Relationships matter?
Mullins (2013:683) points out there are internal and external benefits to having a code of conduct, such that it provides “guidance to employees about what is expected of them and to the outside world about the standards by which the organisation wishes to be judged”. Therefore leaders must have an ethical stance in order to guide the public perception of the organisation from within.
In a survey of 2,918 working adults in both the public and private sectors, Woo and Brymner (2011) discovered a link between positive ethical leadership and middle managers “job satisfaction and effective organisational commitment” suggesting that leaders need to enforce the policies they have endorsed through their actions, in order to drive positive benefits for both their subordinates and the organisation.
Common themes associated with the definition of leadership by authors such as Yukl (2013:22) and Boulden et al (2011:38) conclude that it is a social process which involves creating relationships for positive benefits. As ethics is currently a hot topic in business including hospitality, this would imply that by portraying strong and genuine values and morals, hospitality leaders are more likely to result in creating beneficial relationships with positive benefits to themselves and their organisations.
Does Ethical Leadership have a Positive Effect on Individual and Organisational Effectiveness?
The impact a leader has on others is discussed by Mullins (2013:395) who suggests their “behaviour and actions serve as a role model” which implies they need to be aware of their impact on others. As I suggested in my second blog in order to have a positive impact, an effective leader may use a range of styles such as those presented by Goleman, display a mixture of power types as suggested by Yukl and display characteristics such as those identified by Covey. (Terzeon 2014: Blog 2).
Collier and Esteban (2007) suggest that employees are in part motivated by the approach of top management towards CSR issues and organisational performance on commitments to CSR. Research by Miller (2011:20) into sustainable organisational performance highlighted that employees are motivated when they feel customers are treated ‘fairly and ethically’ by the organisation, and when their ethical values are matched by the organisation. This appears to mirror the approach taken by Compass Group and MacDonald Hotels.
This blog has pointed out the importance to the hospitality sector of businesses, senior managers and leaders displaying ethical behaviour and acting as ambassadors of structured codes of conduct. The positive benefits to employees, who feel their values are matched with the organisation and are therefore more productive and to customers and suppliers who gain a template from which to base their expectations of the company on.
List of References
CIPD (2013) Employee Outlook: Focus on Trust in Leaders [online] available from:
CIPD (2013) Leadership [online] available from: <http://www.cipd.co.uk/hr-resources/factsheets/leadership.aspx#link_1 > [20 March 2014]
Collier, J., Esteban, R. (2007) Corporate Social Responsability and Employee Commitment: Business Ethics: A European Review [online] available from: <http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8608.2006.00466.x/abstract;jsessionid=17D0B7A97E5013D8F15F84C43AA606FD.f04t03?deniedAccessCustomisedMessage=&userIsAuthenticated=false> [02 April 2014]
Kim, W., Brymer, R, (2011) The effects of ethical leadership on manager job satisfaction, commitment, behavioural outcomes, and firm performance [online] available from:
Knights, J. (2014) Effective 21st century organisations require everyone to be a leader [online] available from:
Newcombe., T, (2013) HR should encourage ethical leadership, says Ian Muir [online] Available from: <http://www.hrmagazine.co.uk/hro/news/1141260/hr-encourage-ethical-leadership-ian-muir> [20 March 2014]
Miller, J. McCartney, C., Baron, A., McGurk, J., Robinson, V. (2011) Sustainable Organisation Performance: What Really Makes the Difference? [online] available from: <http://www.cipd.co.uk/binaries/5287STFfinalreportWEB.pdf> [20 March 2014]
Observer (2014) Bankers and ethics are mutually exclusive [online] available from: <http://www.theguardian.com/theobserver/2014/feb/16/letters-private-sector-bonus-culture> [20 March 2014]
Tuppen., H, (2013) Sourcing sustainable foods in hotels [online] available from: <http://www.greenhotelier.org/know-how-guides/sourcing-sustainable-food-in-hotels/ > [20 March 2014]