Ethical leadership typically involves leading employees to build good relationships based on respect and trust. Effective leaders fundamentally believe that acting with integrity, honesty, fairness, equity, justice and compassion result in sustainable success. When people recognize the value of adhering to standards for business conduct, they treat each other with sincerity.

Trust

When an organization’s leader is reliable, willing to admit mistakes and trustworthy, subordinates tend to have confidence in leadership. Employees believe that leaders will keep promises and therefore are willing to commit to the organization’s goals as well. Ethical leaders recognize that by leading by example, creating an environment that fosters productivity, without the distractions of scandals and corruption. When people trust each other, they can focus on getting work done, asking for help when they need it and solving business problems.

Integrity

An effective leader honors commitments and expects subordinates and business partners to do so as well. She maintains loyalty, apologizes when necessary and takes responsibility. Doing so also inspires the same behavior in all transactions. She makes the right choices for long-term benefit. For example, an ethical leader chooses not to use information against a competitor if it was obtained through a third-party who didn’t have the authority to provide it. Long-term, improved ethical leadership tends to positively impact the financial aspects of the organization. It also improves employee morale, job satisfaction and loyalty.

Relationships

Ethical leadership creates and maintains a safe work environment for the workforce. All employees get treated with dignity and respect, regardless of their level in the organization. This type of leadership enables fair and equal opportunity for promotion, following local, state and federal regulations prohibiting discrimination for ethnicity, gender or age. Ethical leadership also provides physical and mental health support and helps employees maintain a healthy life and work balance. It provides work that has meaning and encourages employees to pursue training and development opportunities to advance in their careers.

Transparency

An ethical leader realizes subordinates watch her closely to decide how to act themselves. She makes decisions carefully and communicates in a timely manner. When appropriate, she accepts input from subordinates and considers how her actions, such as strategic goal modifications, leadership changes, policy adjustments and other transformational activities, may distract employees from concentrating on job tasks. Ethical leaders act responsibly on a local and global level. For example, they do not conduct business in locations where employees work in unsafe conditions or receive incommensurate pay. They don't make business deals in an unethical manner or knowingly act to harm the environment.