Linda Fisher Thornton, CEO, Leading in Context LLC

It is easy to name the reasons for leading ethically that revolve around preventing problems - complying with laws and regulations, reducing employee complaints and preventing lawsuits, for example. But what about the many opportunities that proactive ethical leadership provides to the leaders and organizations who embrace it?

The field of ethical leadership is moving from a focus on the problems and penalties that can result when we make mistakes, to the positive potential that ethical leadership has to transform organizations and improve important business metrics.

Why does leading with ethics benefit organizations in transformational ways? It builds trust and releases a great deal of potential for doing great work. It moves important business metrics. It generates a positive ripple effect that enables the organization to profit from doing meaningful work and making a difference. Here are three of the transformational effects of consistent ethical leadership:

1. It brings out the best in employees

If you’ve ever worked for an ethical leader, you probably already know from experience how that ethical leadership brings out our best. It can even be life-changing. Ethical leaders help people grow and develop talents as they do meaningful work in pursuit of the organization’s mission. When they are supported by a leader who shows interest and concern for their learning and success, employees have the freedom to stretch and do their best work. When people know that we care about their best-interests, and that they can count on us to support them and to make ethical choices, they are free to grow and accomplish amazing things.

2. It builds organizational trust and increases capacity

Leaders who are intentional about ethics are careful to demonstrate a high degree of respect and care for others, and that builds trust. The Ethics Resource Center finds that employees in ethical cultures are more loyal, feel more engaged in their work, and are more committed to their companies. The positive ripple effect that is generated by leaders demonstrating respect and care for employees builds a high level of organizational trust and that helps increase organizational capacity.

3. It moves business metrics

Proactive ethical leadership has a positive, systemic effect on the organization that generates clear business advantages. Ethical cultures not only experience reduced risk, they experience improved results. The Ethics Resource Center ties ethical culture to improved employee engagement, and reports that ethics programs and practices are linked to more positive organizational outcomes. The Josephson Institute calls business ethics an essential driver of productivity. The more we learn about ethical leadership, the more we find that it has a transformational power to propel individuals and organizations to successful performance.

The evidence is clear that ethics has powerful positive benefits. Instead of thinking about the problems we can avoid through ethical leadership, we need to be thinking about how to take advantage of the powerful opportunities that proactive ethical leadership provides.

About the Author

Linda Fisher Thornton is CEO of Leading in Context LLC and one of the 2013 Top 100 Thought Leaders in Trustworthy Business Behavior. She is also Adjunct Assistant Professor of Leadership for the University of Richmond School of Professional and Continuing Studies. Her new book is 7Lenses: Learning the Principles and Practices of Ethical Leadership.