What are some principles from the chapter that leaders and managers can use to guide their actions in ethical ways?

Founder & Head Coach/CEO, The Funds2Orgs Group.

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The digital revolution impacted all aspects of people's lives, including leadership. As a result, how leaders communicate with their teams and the public is more transparent and accessible than ever. With this shift, there’s a need for mindful, ethical decision-making recognizing the impact of digital decisions on larger populations. Moreover, it’s essential to grow your business and remain relevant.

How does a leader practice ethical decision-making? The answer is discussing three critical principles for ethical decision-making: transparency, responsibility and empathy. These principles are essential for all leaders to consider as they navigate the challenges and opportunities of the digital era. Moreover, leaders must think about how decisions can impact others through good and bad consequences moving forward.

The Role Of Leadership In The Digital Era

Leadership in the digital age is a tricky topic. With unprecedented access to information and evidence, leaders face difficult decisions that may have consequences for businesses and organizations at large. It can be incredibly challenging for ethical decision-making since many of the implications of these decisions may not be apparent until after the decision happens.

To navigate this new era, you want to take a leadership approach mindful of three fundamental principles: transparency, responsibility and empathy. These principles enable you to make informed decisions while also considering their impact on your entire organization or community.

Transparency is a core leadership principle that helps leaders make clear and consistent decisions. Leaders should be open about their values, ethical standards and other aspects of their leadership philosophy. Doing so allows employees, your customers and the public to know what they should expect from someone who serves as a business leader.

Responsibility is another critical principle in influencing ethical decision-making because it forces leaders to consider the broader impacts of their actions before making a final decision. When making a crucial decision for your company, think beyond just how it will impact you or your team members — think about what could happen if it gets out into the public realm or affects other stakeholders in any way.

Lastly, empathy is the soft skill of feeling like standing in someone else's shoes. In other words, it's the ability to understand someone else's feelings. This principle is essential, especially in the digital age, when smart offices, remote work and digital information could cloud our thinking and ideas. When a leader empathizes, they create positive relationships.

Three Key Principles To Guide Ethical Decision-Making

Leaders often face difficult decisions that carry wide-ranging consequences. As more and more of your leadership happens digitally, it becomes increasingly vital to think about your decisions' impact on others.

1. Transparency

Transparency has been a top topic in the past few years. The use of technology has made it easier for people to catch others in actual or perceived wrongdoings because the information is shared so quickly, and anyone can find out what's going on. Therefore, there’s a high demand for transparency because it creates a level playing field. A lack of transparency can get misinterpreted as hiding things.

If you're not open about your actions or what you do with your time, people will question what you're trying to hide. Transparent leaders earn more respect from their followers because they know they can trust them. To establish this trust, leaders must be honest and straightforward about their decisions and why they make them.

2. Responsibility

For decisions, it’s essential to consider the implications of an action. It means looking at how decisions will impact society as well as yourself. You must be aware of your efforts' potential consequences on others and not just yourself. As digital technology advances, business leaders have more ways to make decisions that can have a significant societal impact. For instance, it's much easier to let go of workers without notice.

This change has negative implications for employees who rely on their steady income to meet expenses or save for retirement. The decision by employers to terminate without notice could lead to these employees experiencing financial insecurity and lacking necessities like food and shelter. As digital technology advances, leaders need to think about how their decision-making will impact themselves and those around them through good and bad consequences.

3. Empathy

The most important of these three principles is empathy. Empathy is defined as the ability to understand the feelings of another person. It's hard to be empathetic in an online world, but that doesn't mean it isn't vital. Remember, real people exist on the other end of your online interactions, not just screens. With digital marketing, you can reach so many people so quickly, which means you have the potential to do great good — or harm.

As a leader, you want to make sure you consider how your choices could affect others around you. That's why it's essential to consider how your actions impact those around you before taking any action. You also want to think about how each decision affects those who interact with your brand online — whether that's through social media posts, ads or something else entirely! It's also why it's so crucial for leaders to be mindful of their digital decisions and ensure they're ethically sound.

Doing Better For Your Company And The Public

Modern leaders, especially those with an online presence, are simultaneously expected to be perfect and imperfect. It’s partially due to the never-ending stream of content consumption, exposing every flaw and human error. But it's also because most everyone now lives in a digital era.

Therefore, leaders need more ethical leadership skills than those from earlier times. You must now think strategically and holistically about your business. And you need to understand the role of technology as the driving force for change. By making decisions with the three principles of transparency, responsibility and empathy, in mind, you’ll do better not only for your company, team and profitability, but you'll also do good for the public — and that matters.

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Ethical leadership must be a conscious decision. As Fred Kofman writes in his book Conscious Business, “To be conscious means to be awake, mindful. To live consciously means to be open to perceiving the world around and within us, to understand our circumstances, and to decide how to respond to them in ways that honor our needs, values, and goals.”

He continues, “To be unconscious is to be asleep, mindless… Consciousness enables us to face our circumstances and pursue our goals in alignment with our values. When we lose consciousness, we are swept away by instincts and habits that may not serve us. We pursue goals that are not conducive to our health and happiness, we act in ways that we later regret, and we produce results that hurt us and those we care about.”

There are many good reasons to be an ethical leader.

From a collective perspective, leaders can inspire those around them to behave ethically. By setting an example and giving the direction for ethical behavior, others will observe and act similarly. In this way, ethical leaders can positively influence many others, presenting them with a set of actions that they can adopt for the greater good.

On a personal level, being an ethical leader is essential for credibility and reputation. If one aims to be a leader, it is a long game. Behaving unethically can automatically take a leader out of the A-league and may heavily damage their personal or company brand. Moreover, unethical behaviors often deteriorate one's self-esteem, leading to a suboptimal outcome and a missed opportunity to express one’s full potential.

Ethical leadership encompasses many things but ultimately boils down to these six main elements.

1. Honesty. Honesty makes ethical leaders worthy of the trust others place in them. It means leaders commit to presenting facts as they are, playing fair with competitors, and communicating honestly with others.
2. Justice. To be fair means to treat everyone equally, offer opportunities with no favoritism, and condemn improper behaviors and manipulations, as well as any other actions that could harm someone.
3. Respect. Ethical leaders respect others around them, regardless of their position or identifying characteristics. This means they listen to each stakeholder, foster inclusion, and value diversity.
4. Integrity. Integrity is shown when values, words, and actions are aligned and consistent. It is not enough to talk the talk, one has to walk the walk to demonstrate integrity.
5. Responsibility. Responsibility means accepting to be in charge, embracing the power and duties that come with it, and always responding and being present in challenging situations.
6. Transparency. Transparency concerns mainly the communication with all stakeholders. It means keeping an open dialogue, accepting feedback, and disclosing the information others need to deliver their work.  

“The best way to do is to be.” – Lao Tzu

Leaders play a crucial role in corporations, as they have been chosen to guide others. What do great ethical leaders do, and what ethical traits do they have in common?

1. They know their internal compass and values. Knowing oneself is the first trait an ethical leader has to possess. By knowing their own values and principles, they can make them visible to others, take positions, and solidly enter negotiations.
2. They have consistent ethical behavior. Reputation is built on repetition, and ethical leaders know that. Leaders are vulnerable, as the trust that people place in them can quickly fade if they misbehave—no matter how well they have behaved in the past. Leaders have to send continuous signals to show that people can continue trusting them. 
3. They do not tolerate deviations from the ethical code. If someone acts against the Code of Conduct and the leader does not take action, this may signal that the Code of Conduct is not important. Ethical leaders do not make exceptions in this area, and they immediately signal which behaviors are not tolerated. In doing so, they build consistency and credibility, and avoid confusion and doubts about accepted behaviors.
4. They raise their concerns, even if unpopular.  Ethical leaders know that overlooking important details may cause significant damages. They carefully observe situations to identify potential issues. When facing a doubt or a dilemma, ethical leaders raise their concerns—even if this means slowing things down or generating more work. 
5. They admit mistakes and share a recovery plan if needed. If things go wrong, ethical leaders do not hide or minimize what happened. Instead, they own their mistake, apologize, find ways to solve the issue, and share all possible recovery plans with stakeholders. This shows they care, and they are doing what is in their power to improve an unfortunate situation. 
6. They are willing to assume full responsibility. As Napoleon Hill states, “The successful leader must be willing to assume responsibility for the mistakes and the shortcomings of his followers. If he tries to shift this responsibility, he will not remain the leader. If one of his followers makes a mistake and shows himself incompetent, the leader must consider that it is he who failed.“ Lack of responsibility in organizations leads to ineffectiveness, confusion, inaction, and a waste of time and resources. Ethical leaders hold themselves accountable, take charge, and shape the present and future through their words and deeds.
7. They always show up and speak for their teams. Ethical leaders are present in good and bad times, develop their teams, and defend others when needed. They are at the front when the storm hits, giving direction and helping get their teams through their challenges. They know they are there to serve the interests of their teams and organizations above their own interests.
8. They act with fairness. Leaders have to face many decisions and negotiations. Their behavior clearly favors long-term wins over short-term gains. It also supports meritocracy and fair treatment of every individual, regardless of status, ethnicity, age, or any other potential factor of discrimination.
9. They walk the talk. Last but not least, ethical leaders act with integrity. They practice what they preach, and their values, words, and deeds are aligned and visible to everyone. If they would not hold themselves to the same standards they present to others, their credibility and reputation would suffer. Leading by example is a choice of consciousness and requires daily focus, but pays off like nothing else.

Ethical leadership provides enormous benefits to organizations, in many ways.

1. Increased sense of belonging. When company values and individual values are aligned and ethical principles are adopted, everyone’s general well-being will increase. This leads to a positive atmosphere, which reinforces and fosters ethical behaviors, creating a virtuous loop where everyone will feel at home and in the right condition to give their best.
2. Improved relationships with customers. Customers will feel they’ve made a good decision to work with your company when they perceive and witness ethical leadership and cultural values. This will encourage them to continue doing business with you, while also boosting your reputation as one of the fair players in the market.
3. Respect from society and communities. Organizations that are led by ethical leaders set a good example for others, and are respected and valued as a result. These are the types of companies people want to work for, do business with, and emulate in their own companies.
4. Support in times of crises. The world changes rapidly and companies may face many challenges. But people want to see ethical leaders, and the companies they work for, thrive. Having leaders who behave ethically and act with kindness and respect can be the ticket to getting through tough times.
5. Loyal employees. When leaders are fair and just, team members have one less incentive to move elsewhere. Ethical leaders provide the optimal setting for employees by inspiring, developing, and establishing a culture of trust and respect. This leads to significant benefits like lower turnover, higher productivity, and loyalty.
6. Better morale. A strong emphasis on values and ethics creates a positive work environment that fosters an overall better mood and a higher understanding among individuals. When the roots are solid, the stress and tensions of daily business are like the wind on a stable tree. People usually feel the roots and know if they can rely on them and feel confident, or if they will have to keep their guard up.
7. Higher stability on the market. Organizations with ethical leaders are at lower risk of sudden crises due to internal factors. This usually is acknowledged and appreciated by investors.
8. Higher motivation. When each team member knows that the company is operating ethically and for the benefit of the greater, they will want to do their part to further the company’s mission.

Great leaders know there is always room for improvement. Here are some ways you can become a better ethical leader.

1. Choose ethical business partners. The people you choose as employees, partners, consultants, attorneys, suppliers, and customers will signal to everybody else what you stand for. Choose wisely. 
2. Make your values visible. Once you identify the values you stand for, state them clearly. By doing so, you will avoid misunderstandings, and it will be easy for people to decide to partner with you—or not.  
3. Set desired behaviors and put a control mechanism in place. Your values should be reflected in your behaviors, which are visible manifestations that can be periodically assessed. Take the time to consider whether you are exhibiting your desired behaviors. If any deviation is found, it should be examined and resolved before it becomes problematic.
4. Never ask an employee to act against the agreed rules. Rules are in place for a reason, and an ethical leader should never ask a team member for a derogation—or allow one from themselves. For example, if the rule is that team members are given a long break after an 8-hour shift, a leader should never ask them to stay late. This will support consistency and will set an ethical example for everyone who is watching.
5. Don’t lie about the future. If you know that something isn’t going to happen, don’t say it will. This may concern a promotion, exceptional financial results, or anything else that is not supported by data. Imperfect is better than fake, and it will pay off in the long-term.
6. Don’t hinder the development of your team members. Help your team members be the best version of themselves, even if it means you might lose them to another opportunity. You can’t keep every employee forever, but you can develop them into stronger professionals while they’re under your guidance.
7. Identify potential “worst case scenarios.” A leader should always be prepared for potential risks and worst-case scenarios. Identify them early so you can consider all ethical impacts and potential solutions well before you go into crisis mode.
8. Acknowledge others. Don’t take credit for someone else’s work, even if it’s someone that works under you. Instead, acknowledge your team members’ successes. This will foster loyalty, increase motivation, and boost performance.

Want to see what ethical leadership looks like in action? These ethical leadership examples will demonstrate some real-world scenarios.

• Walking the talk on safety-related topics. Safety is a critical focus at every manufacturing company. Every meeting in a plant will begin with a safety briefing and attendees will be notified of the emergency exit. But it’s not enough to simply discuss safety protocols, leaders must demonstrate them as well. For instance, holding onto the handrail when using the stairs, wearing safety glasses and helmets, and not using their mobile phones in the plants. This shows that safety is truly a priority.
• Deliver what has been promised. When creating marketing materials or speaking to customers on sales calls, be honest and transparent about what is being offered.  For example, if you advertise that a given product has certain characteristics, customers should be able to confirm those characteristics are accurate representations of the product. Delivering on promises clearly demonstrates consistency and builds trust with customers.
• Preparing sound contracts. Ethical leaders pay attention to details. When working with external consultants, for example, ensure contracts have all necessary terms and conditions, such as the time frame, payment terms, and scope of the service provided.
• Only recommend something if it’s worth it. Ethical leaders only recommend a product or service if they think it will provide value. For example, a law firm might recommend that a client conduct an equal pay audit to assess and mitigate potential risk. These suggestions are for the good of the company, not the law firm, and help generate satisfaction, improve relationships, and retain customers.

An ethical leadership example in action

Imagine you’re on a call with your biggest customer, alongside your boss, and the customer is extremely dissatisfied. Your product had an outage that severely impacted their business and they want to make sure it doesn’t happen again.  

Your boss assures them this is a one-time occurrence, and that it won’t be a problem in the future. When you hang up, you remind your boss that this issue has been occurring among customers with increasing frequency and that a fix is still in the works. Your boss nods and says, “Yes, but they don’t need to know that just before their contract renewal.”

Fast forward a couple of months, and your customer calls to cancel their contract following another outage. Your boss again gets on the line to say how sorry they are and that this is a rare occurrence, but that they can’t cancel their contract without ample notice.

Is that the kind of person you want to work for? Or do business with? They knowingly put their customer in a bad position, so they could get credit for a contract renewal. 

This not only creates a strained relationship with your customer, but it also demonstrates to everyone on your team that this sort of behavior is expected. As others emulate this behavior, your company begins to get a bad reputation, lose customers, and struggle to find new customers.

Now imagine if your boss had owned up to the outages, promised to keep the customer in the loop about fixes, and sincerely asked the customer to stay onboard. The customer may or may not renew, but they wouldn’t be leaving with bad blood. They may even come back at a later date or refer other potential customers.

That’s the difference ethical leadership can make. It may literally be the difference between survival and failure.

Ethics and leadership go hand-in-hand. While some tend to think there is a choice to make between being profitable and successful, or behaving ethically, That’s simply not the case. Ethical people and leaders are necessary drivers for success.

What if we give ethical leadership a chance?

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