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Chapter 4

Ethical leadership in business focuses on collective values and exemplifying an organization's ethics. Leaders ensure employee behavior matches corporate values and ethics by the systems they implement. A values statement lists principles guiding an organization and establishes standards for decision making. A code of conduct provides rules for employee actions alongside principles. Ethics training, audits, and consultants help communicate and enforce ethical business practices.

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199 views11 pages

Chapter 4

Ethical leadership in business focuses on collective values and exemplifying an organization's ethics. Leaders ensure employee behavior matches corporate values and ethics by the systems they implement. A values statement lists principles guiding an organization and establishes standards for decision making. A code of conduct provides rules for employee actions alongside principles. Ethics training, audits, and consultants help communicate and enforce ethical business practices.

Uploaded by

Aschenaki Mebre
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter Four

Ethics of Business: Management and Leadership


 Ethical leadership in business is focused on the collective values,
morals, and beliefs of individuals and their organizations.
 The role of business leaders is to support and demonstrate a company's
ethical values and exemplify the heart and soul of an organization.
 These leaders do more than merely manage staff.
 Ethical leadership means that individuals behave according to a set
of principles and values that are recognized by the majority as a
sound basis for the common good.
 These include integrity, respect, trust, fairness, transparency, and
honesty. Ethical leadership must be a conscious decision.
 Ethical leadership means both acting ethically and setting the
standard for others to do so as well. Leaders have an opportunity to
inspire others not only to do the right thing but also to consider the
kind of people they want to be.
 An ethical leader ensures the values a company
supports are matched by the behaviour expected of
and demonstrated by employees.
 “The employees are doing what they are rewarded for, or
held accountable for, in the systems the managers have
put into place.
Statement of Value
 Values are basic and fundamental beliefs that guide or
motivate attitudes or actions.
 They help us to determine what is important to us.
 Ethics is concerned with human actions, and the choice
of those actions.
 Ethics evaluates those actions, and the values that
underlie them.
 A values statement lists the core principles that guide
and direct the organization and its culture.
 In a values-led organization, the values create a moral
compass for the organization and its employees.
 It guides decision-making and establishes a standard
against which actions can be assessed.
• Value statements, are the core, guiding principles of an
organization; they define what a company believes in
and how people in the organization are expected to
behave—with each other, customers, suppliers and other
stakeholders.
• For example, if one of the core values is based around
“Responsibility,” the example could be something like
“We take ownership in our work each and every day.”
This helps everyone across the business understand
exactly what the value statement looks like in action.
• Value statements are important because they inform the
public of your beliefs and values, as mentioned prior.
• Value statements are important because they order to
your management and employees the actions to take.
They also provide guidance on why the actions should
be taken.
There are 4 characteristics of a value proposition;
1. Needs to be Short. – Most organisations try to make it
sound as complicated as possible. ...
2. Use Simple Language. – Assume the lowest common
denominator. ...
3. Make it Specific. – In other words what's in it for me.
4. Reason to Believe.
Codes of conduct and ethics
 An ethical code of conduct is a guide to principles
created to assist practitioners in performing business
in the right way.
 A code of ethics can reinforce the values stated in the
mission and vision of the company.
 A code of ethics is broader, providing a set of principles
that affect employee mind-set and decision-making.
 A code of conduct offers principles defining the ethics of
a business, but it also contains specific rules for employee
actions and behaviour.
Examples include:
• Standards of professionalism.
• Discrimination and sexual harassment policies.
• Use of company assets.
• Use of social media.
• Communication rules.
• Disciplinary process.
Ethics training, audits and consultants
 Ethics training is designed to teach people how to make
decisions in situations where there is an ethical
component: situations in which some decisions,
behaviours, or outcomes could be evaluated as right or
wrong, or good or bad.
 Ethics trainings are essential to preserving a positive
business culture and responsive to any ethical
dilemmas that could arise.
 Communicating ethical business behavior and
implementing that behavior into the workplace is an
important business strategy that can only improve a
business.
 An ethics audit is a comparison between actual employee behavior
and the guidance for employee behavior provided in policies and
procedures.
 The more descriptive and specific ethics-related policies and
procedures are, the easier it is to make these comparisons.  
What are the steps in an ethics audit?
1. Company Values. ...
2. Code of Ethics and Code of Conduct. ...
3. Risk Assessment. ...
4. Ethics and Business Conduct Policies. ...
5. Awareness Training Audit. ...
6. Investigation and Reporting Mechanisms. ...
7. Communication Program. ...
8. Ethics and Compliance Program Assessment and Evaluation.
• We can identify three types of
audits, namely, Financial statement audit,
Compliance audit and Operational audit.
• A financial statement audit is the examination of an
entity's financial statements and accompanying
disclosures by an independent auditor. 
• A compliance audit is a comprehensive review of an
organization's adherence to regulatory guidelines.
• An operational audit is an examination of the manner
in which an organization conducts business, with the
objective of pointing out improvements that will
increase its efficiency and effectiveness.
• Ethics consultants are trained to identify,
analyze, and help resolve difficult ethical issues.
• Ethics consultants in social work can assume
various roles, depending on their employment
setting and responsibilities.

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