Ethical leadership is the sensitivity to understand what is happening over time and see how the definition of ethicality is changing and evolving. As the definition can change slowly or quickly, keeping track of its evolution can be challenging.

Perhaps this is precisely why, in recent years, there have been reports in the media about miscalculations by senior management. It is hard to notice those everyday situations where the normal way of doing things has changed. The way we used to do things is no longer the accepted way of doing them. Most often these errors are not, by any means, intentional but due to lack of competence or thoughtlessness.

Ethical leadership also involves the planting of responsibility and broad judgement throughout the organisation, and into every single member of it.

In a nutshell, ethical leadership means simultaneously ensuring profitability, productivity and occupational wellbeing.

An ethical leader takes personal responsibility for success over the short and the long term.

Development based on facts

By combining the risk management side of ethical leadership with the responsibility for the education of the organisation’s members and with competent decision-making, the company may be able to achieve a sustainable competitive advantage.

To form the starting point for developing competitive advantage, it is worth making a realistic and impartial analysis of the current situation regarding the factors in the organisation that promote the achievement of ethicality and those which hinder it. It is necessary to form a distinction between information that is based on observation, information based on research and information based on assumptions. Various improvements can then be accurately targeted based on this information.

Organisational culture has huge significance for ethical operations

Organisational culture affects the way in which the members of the organisation work in interaction with each other and with external interest groups. Which actions are valued and which are not? What is raised for discussion and what is not? It is important to be aware of the organisational culture’s ethical situation and of its guiding effect.

A good starting point for the development of an ethical organisational culture is the written code of ethics, or code of conduct, based on the company’s publicised values.

The organisation must discuss and agree on what are acceptable functions and what are not. During the project, employees will hear from each other why a certain way of doing things is annoying or can even make someone’s work more difficult. A drafting process is a way of bringing up difficult matters for discussion without any negative consequences. At the same time, the employees become familiar with the guideline at the drafting phase and the spirit of the guideline comes to life. Not everything can be recorded in the guideline, nor would this be this appropriate. Therefore, it is important for everyone to understand the spirit in which the guideline has been drafted.

Ethical organisational culture strengthens innovation skills and wellbeing

Research shows that ability to innovate, precondition for the creative development of services and products, and employee wellbeing are connected to ethical organisational culture.

When social, cultural and mental capital grows with the development of the organisational culture, new ways to increase economic capital are constructed.

The world is changing rapidly

To make sure your leadership skills and ethical perception are as good as possible, make sure you have resources to learn about ethical leadership. Start your journey into simultaneous profitability and wellbeing by reading Juuriharja's guide Why should you improve your ethical leadership skills and how to do it?