How will ethical issues affect leadership in a business

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Contemporary and Pervasive Issues

“How will ethical issues affect leadership in a business?”

Name: Lauren Canning

Student no: 15010789        

Date: 31/03/2009

Tutor: Christine Gilligan

Word Count: 5671

In this essay I am going to discuss how ethical issues can affect leadership in a business. In order to answer this question the essay will start by giving a brief introduction into the two topics; leadership and business ethics. I will then aim to successfully link them by considering the argument of whether leaders should concern themselves with ethical issues or whether making as much money as possible should be their main consideration.

Leadership has many different meanings and there have been numerous different classification systems used to define the dimensions of leadership. Infact as Stogdill (1974) pointed out, “there are almost as many different definitions of leadership as there are people who have tried to define it.”

One popular definition used for this subject is that “leadership may be considered as the process (act) of influencing the activities of an organized group in its efforts toward goal setting and goal achievement”(Stogdill, 1974).  This definition suggests that it is not a characteristic but is an event that takes place between a leader and his or her followers and that there are three aspects to leadership. Firstly, it involves influence in that leaders induce their followers to behave in a certain way. The second aspect is that leadership occurs in a group context and finally that leadership includes attention to goals, which a leader must direct their followers to achieve.

Over the years there have been many studies and theories formed on leadership. The first, which dominated until the late 1940’s, was the Trait Approach, which focused on leaders and not followers. It assumed that leaders had certain traits, such as intelligence and integrity and that they are born and not made. However, this approach failed to take situations into account and recent research has proven that traits alone cannot account for effectiveness. Following this was the style approach, which focuses on what leaders do and how they act towards subordinates rather than characteristics. This era defines leadership styles as either Autocratic, democratic or laissez faire. However, this approach fails to find which of these leadership styles is most effective in every situation.

Following this was the situational and contingency theories, which assume that different situations demand different types of leadership. However it assumes that people can learn to become effective leaders and does not adequately explain the link between styles and situation. The Situational theory ‘relates four leadership styles; Directing, Coaching, Supporting and delegating to followers readiness for them” (Gill, 2006:48). However, the model assumes both flexibility of style and the ability to diagnose the situation and the style that is needed.

In 1980’s the New Leadership approach was introduced, which compromises visionary, charismatic and transformational leadership theories. “Transformational leadership occurs when leaders raise peoples motivation to act and create a sense of higher purpose” (Gill, 2006:36). Similarly and published around the same time was the theory of Charismatic leadership, who act in unique ways that have specific charismatic effects on their followers. This stage provides a broader view of leadership that augments other models and places a strong emphasis on leaders needs, values and morals. However, “due to the wide range that it covers it lacks conceptual clarity and it is difficult to define the parameters of transformational leadership” (Northouse, 2004:185). Finally, in the late 1990’s Post-charismatic and Post-transformational theories emerged, which focuses on leadership as a community and both leaders and followers working together.

Leadership is a process that is similar to management in many ways and many of the functions of management are included in the definition of leadership. This was argued by Yukl (1989), who said “when managers are involved in influencing a group to meet its goals, they are involved in leadership. When leaders are involved in planning, organizing, staffing and controlling, they re involved in management. Both processes involve influencing a group of individuals toward a goal attainment.” Both management and leadership involve influence, working with people, meeting goals and many other similar functions. However, there is a distinct difference between leadership and management and the main functions of the two are quite dissimilar. It was argued by Kotter (1990) that the “function of management is to provide order and consistency to organizations, whereas the primary function of leadership is to produce change and movement.” Whilst managers plan and budget, a leader creates a vision and sets strategies, instead of controlling and problem solving a leader motivates and inspires his followers. In addition to this, Bennis and Nanus (1985) made the distinction very clear, “managers are people who do things right and leaders are people who do the right things.”

Although it argued that the two are very different it is for this reason that both are needed for an organization to be a success. Without management outcomes can be meaningless or misdirected and without leadership the outcome can be stifling and bureaucratic. This was the opinion of Warner Burke (1986:68), who said that “For clarity of goals and direction, managers need leaders. For indispensable help in reaching goals, leaders need managers.”

A further question that is often raised on the topic of leadership is whether leaders are born or made? Whilst some would argue that “It is not a matter of whether leaders are born or made.” They are born and made” (Conger 2004), it is a topic that has caused great debate. Many would argue that leadership is innate (inborn) and that the character, style and competence needed to be a leader is infact genetic and it cannot be developed. However, others have argued that leadership is not down to genetics alone but that it can infact be developed over a period of time through environment and experiences. This is the opinion argued by Winston (Winston 2003), who says that “we are not merely the product of our genes: environment has a huge impact but in a mysterious way.” A further aspect to this question is whether leadership can be taught. There are many opinions on this matter but the “tendency is towards agreeing that, while little if anything can be taught, it can be learnt through development, growth and practise” (Gill, 2006:272).

A business operates according to the vision and values of its leader. A leader has many roles within an organization, which can be key to its long-term success.  The first of these is to provide an overall direction by “defining and communicating a meaningful and attractive vision of the future and a mission through which the organization will pursue it” (Gill, 2006:96). This direction which may stem a long way into the future will need to consider competitors, changes in tastes and current standing in the market. In relation to this it is a leader's responsibility to create a strong and positive organizational culture with its followers having shared vision and values, which can result in an effective organization.

A further role of a leader is to “develop, get commitment to and ensure the successful implementation of strategies” (Gill, 2006:176). This is one of the most important roles for a leader and involves them planning where they want to be in the future and how they are going to get there, for example by acquisitions or moving into new geographical markets.

Another role of a leader in business is to empower employees to be able to do what needs to be done. In order to do this a leader must give them the knowledge, skills, authority and freedom to manage themselves and be accountable for their behavior. If a leader successfully empowers his employs it can lead to both job satisfaction and enhanced organizational performance in many ways. Similarly it is an important role of a leader to influence, motivate and inspire employees to reach the companies goals. One of the key factors that will determines whether it is achieved or falters will be the ability of the leader in these three areas.

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Finally if an organization is to continue to prosper, people development must be high on a leader's agenda, by identifying the most talented people coming through and making sure that they are developed for major roles in the future. Ensuring that there is a continued stream of talent developed is a key factor in sustainable progress and achievement. An effective leader has the ability to successfully carry out all of these roles.

The second topic that this essay involves is business ethics, which has been described by some as ‘a passing fashion which will come and go ...

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