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In todays world leaders are living and nurturing in a more challenging and complicated environment. In this new world where everybody is aware of its rights and popularity of ethical activists is growing day by day working with and through people is hard task to perform. The safe road to success is to be an ethical and promote ethics.
"The problem to be investigated is to find the relationship between leadership, ethical stewardship and trustworthiness and their impact on organizational success or failure"
Concepts in the problem definition:
Let us first discuss the main and basic concepts in the problem statement. If these concepts are clear then half of your work would be done or half of the problem is solved.
Traditionally the leaders were fully focused only on increasing production and earning huge profits. They have no concern about their organizational member. They just wanted that their work should be done by hook or by crook. In this 21st century the theorists emphasizes on the concept of ethical leadership. Good leadership refers not only to competence, but to ethics and transforming people as well. Ethical leadership requires ethical leaders. Ethical leadership means respecting the rights and pride of others. Setting examples by leaders own good conduct. Ethical leaders are people oriented. They understand the consequences of their actions and its impact on other organizational members.
The best example of unethical leadership and its dangerous impact is of Enron corporation. According to Seeger and Ulmer, which is noted in Organizational Communication: Perspectives and Trends by Michael J. Papa, Tom D. Daniels and Barry K. Spiker, this is the best way to understand ethical failures.
Enron Corporation is a gas pipeline company that turned into a huge enterprise. In 2001, the company collapsed due to scandals and bad leadership. Basically, the reason why they failed was due to a set of values that employees had to agree to, but in fact executives were demonstrating a different set of values. Due to this miscommunication of values and other important facts, the company went bankrupt.
The conclusion to the Enron case, according to Wee Heesun, is that smart CEOs will realize that an honest, transparent, and trustworthy culture can also bolster employee morale and ultimately guard shareholder value.
Trust is a state of mind in which you confidence on someone actions, behaviors, attitude etc. trustworthiness involves four basic quality in an organizational setting. They are: constant integrity, honesty, promise keeping and loyalty. More elaborately say the leadership to be trustworthy has to have at least the following four basic behavioral aspects:
They should have the ability to admit their mistakes. Although it's a courageous thing to do but to be on a number one position your organizational member should have trust in you or whatever you do.
Follow through: means do what you stand. Fulfill your commitment.
Involve the employees in decision making process. This will increase their confidence in you and they start owning the organization which will ultimately benefits the leaders in the long run.
They should accept the responsibility of their own actions and its consequences.
If the leaders fully adopt the above four behavioral aspects then they will be able to establish trust environment in their organization. This will hold the organization together and creates the environment for triumph.
Ethical stewardship consists of combination of two concepts ethics and stewardship. In an organization ethics refers to moral values and the guiding principles prevail in it, stewardship refers to the management that runs the organization. So, the term ethical stewardship means running the organization by following the moral values (individuals or employees) and guiding principles.
The leaders who follow ethical stewardship pay fair wages or salaries to their employees, the employees feel free to share their problems with them. If the employees are depressed and reluctant to the leader they may create mistakes which will go against the success of their leadership.
Ethical leadership, trustworthiness and ethical stewardship all three involves concern for the stakeholders of the organization.
The leaders must make those decisions that will not only benefit them, but also they must think about how the other people will be affected (Stansbury 33).
The best leaders make known their values and their ethics and preach them in their leadership style and actions. It consists of communicating complete and accurate information, where there is a personal, professional, ethical, or legal obligation to do so (McQueeney 165).
The stakeholders are very important and sensitive issue to any organization. If the leaders satisfies them no one even dare to touch the success of that particular organization.
When the employee's level of job satisfaction is high then they are more productive and loyal to the organization but how this high level of their job satisfaction could be achieved.
These employees are vital to any organization and if they are unhappy then the success is a doubtful question. So the leaders should try to:
Promote an environment that will foster the employee's personal and professional growth.
The reward and punishment should be fair. The employees who follow the company's rules and procedure should received encouragement from the senior management. Meeting the assignments given to them should be rewarded. In the same way the penalties should to those who break the rules and procedures. Penalties should not involve any personal grudge or hatred. Rewards and punishments should be free from biasness. Favoritism and nepotism should be avoided. This will motivate the bad employees to do well (in fear of being punished on their wrong doings) and good employees to become exceptional employees. The ultimate benefit is only to the organization.
Incentive based pays and employee's contribution in decision making process will increase their involvement and interest in the organization. This will create loyalty and someone who is loyalty to their leaders can do anything for them. More appropriately say the employees would also become loyal to their co-workers, their supervisors, their customers and to the investors.
Customers are the kings. For them the companies struggle and fought. The organization that would able to attract more customer or loyal customer would be the market leader and gain competitive edge over others. Here raises the question how? The answer is very easy yet considerable "Quality of the deliverables". If the customer trusted that organization will provide the best quality product at reasonable price then the organization maintain and sustain competitive advantage. The credit of winning customer's trust goes to the ethical leaders. As described early if the leader uses ethical leadership practices, creates trustworthiness and obtain ethical stewardship with the employees of its organization then definitely they give the best of their abilities to the leader and the product or whatever the final deliverable of the organization is would beyond any doubt meets or exceeds customer's expectation.
The leaders should protect the rights of shareholders because they are the finance of the organization. They contributed their money and want a fair return as well. Transparency and accountability checks should be maintained in this regard. Transparency and accountability helps to figure out the corrupt from the honest. Precision in the annual reports will attract more and more financers. More financer means more capital, more capital means more ability to purchase latest machinery, hire the services of specialists. In short able to obtain the best in the world to produce the organizations final outcome. You can imagine that a product produced with excellent material and people would definitely be out of the world class.
Ethical leadership would also abide by the rule of law formulated by the government. They pay taxes on time, not involve in smuggling of their raw material or selling the products and services illegally, dump their industrial waste properly (if any) etc. the government in these situations trust you and declare you a trusted organization publically. Investors, customers and other people will prefer to be a part of those organizations that are recognized by the governments. So to be successful organization becomes easier.
To sum up the stakeholders part I would say the leadership that protects their (stakeholders) interest and show concern for them (stakeholders) will enjoy the fruits of competitive advantage in the long run.
Linking ethical leadership, trustworthiness and ethical stewardship together
The relationship between ethical leadership, trustworthiness and ethical stewardship is interdependency on each other. The base of this relationship is trustworthiness. The ethical leader must exercising authority within the following five styles
Inspiration: the organizational members will contribute their fullest capabilities to achieve organizational purposes when the leaders set example by themselves.
Facilitation: guide the organizational members whenever they feel it necessary them where necessary, this will enable them to contribute their capabilities as fully as possible.
Persuasion: give the organizational members reasons to contribute towards the achievement of organizational purposes.
Manipulation: Offer both extrinsic and intrinsic for their contribution to the achievement of organizational purposes. This will be a powerful in the case where commitment is lacking.
Coercion: this style would be adopted in case of last resort. When the leaders feels that this particular employee is continuously breaking the rules and moral values of the organization then ask him/her to leaves if he/she wants to stay then use this strategy to obtain its commitment.
All of the above five style falls into the range of ethical and moral values. So the ethical steward conditions are also met which means these three concepts (ethical leadership, trustworthiness and ethical stewardship) are closing linked with each other.
To conclude this paper I would say that ethics is closely related to trust. If the leadership wants to gain trust or become trustworthy in the eyes of its organizational members he/she should strictly adopt practices of ethical behavior himself/herself. Ethical stewardship sounds a simple concept to implement but in real a very complicated term when put in action. Employees have many other responsibilities and stress levels if they do not trust their leaders they will not share their problems with them which leads to failure of the leadership. To remain ethical steward try to be open, honest, collaborative and co-operative. One important thing I would like to say is that only an ethical leadership cannot alone win the trust of organizational members and considered as ethical stewards some burden lies on the part of management involved in the organization. If a person is deeply drown in the well of illegitimacy or unethical practices then no one in this world would help that person to become fair or ethical. One more thing that the leader should do is to carefully recruit the people in the organization. Update the recruitment system by hiring specialists and professionals. So not only the leader should be ethical but the people working in the organization must have some ethical and moral values in them