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By Cynthia Silvia, DHA
Faculty Member, School of Business, American Public University
Ethical leadership should be a central tenet of our careers in retail management because ethics play a crucial role in how business is conducted. Ethics is the guiding compass by which an individual or organization ought to operate.
The reputation of an organization is often built upon its history of doing the right thing.
When seven people died in the Chicago area after someone injected cyanide into unopened bottles of Extra-Strength Tylenol in 1992, the manufacturer, Johnson & Johnson, put customer safety before profits and pulled all Tylenol off the shelves nationwide.
Johnson & Johnson also issued national warnings urging the public not to use the product. The recall cost the company millions of dollars. Tylenol relatively quickly re-established its brand and reputation for reliability. In the end, Tylenol recovered its entire market share. The Tylenol case has become a standard of corporate ethical responsibility.
Conversely, executives at the Houston energy giant Enron chose to hide their unethical actions. CEO Jeffrey Skilling covered up Enron’s financial losses from its stock trading business and other company operations to make the company appear to be profitable. Despite all efforts, Enron went into bankruptcy and several officials went to jail. Skilling is due to be released in 2028.
Behavior Standards Set by Management and Staff Define Business Ethics
Ethics are the foundation of a business’s strategic plan. The behavioral standards set by management and staff define business ethics from a strategic as well as an operational level. Maintaining high ethical standards within an organization often leads to a competitive advantage and enhances a company’s reputation with the public.
As Dawn-Marie Driscoll, an executive fellow and advisory board member of the Center for Business Ethics at Bentley University in Waltham, Massachusetts, says “A business that lacks [ethical] values is a business at risk.”
A manager’s responsibility includes the fair treatment of employees, vendors and consumers as well as the development of relationships based on trust and transparency. Senior management bears the most responsibility, followed by middle management and then lower-level management at the group or division levels. But all managers must demonstrate the capacity to act ethically and still fulfill the needs of the organization.
Financial managers often find themselves caught between trying to act ethically while maximizing the wealth of the shareholders. It is possible, however, to operate on an ethical level and still remain profitable.
Not only must the ethical values of an organization be aboveboard, but the ethical values of the financial managers must also be beyond reproach. They are responsible for maintaining boundaries that prevent professional and personal conflicts with the interests of the organization.
Each manager, however, must be responsible for maintaining corporate confidentiality and abiding by the law.
Accountability — Key Underlying Principle of Ethical Business Leaderships
A key underlying principle of ethical business leadership is accountability — to associates, to other leaders within the company and to the company itself. Ethical leadership is indicative of a moral obligation to act, as well as being a legal and corporate responsibility.
Ethical leaders must have a solid understanding of their core values and live by those values every day in every aspect of their lives, at work and at home. They must have a profound respect for human rights along with a sense of pride and self-respect.
Ethical leaders also must have the ability to transform their organizations and the people who work for them. These leaders are effective in influencing their teams to accomplish the overall goals of the organization by influencing processes and promoting changes in both attitudes and values.
Dr. Bill Grace, of the Center for Ethical Leadership, is credited with developing the 4-V model of ethical leadership, which consists of four key components:
- Value – Ethical leaders have the capacity to merge their own values with their choices in their personal, professional, and public lives
- Vision – Ethical leaders have the capacity to combine actions and their vision in the area of service to the community
- Voice – Ethical leaders must have the capacity to express their vision to others
- Virtue – Ethical leaders aim to do the right thing for the betterment of the team and the community
Ethical standards within every organization have a major effect on how business is conducted. There is a fine line in the retail industry between doing the right thing and attempting to maximize profits. It is important to maintain high standards for the company’s benefit, but also for the consumers’ benefit, and for the benefit of the economy.
How Do We Define Ethical Leadership?
Ethical leadership is knowing your core values and having the conviction to live these values daily. Ethical leaders create a culture that treats others with respect, dignity and trust.
Ethical leaders have a profound influence on their associates by focusing on doing the right thing. They empower their associates to perform at peak levels, foster a sense of community and encourage fairness.
What Does Ethical Leadership Mean for Business Today?
Ethical leaders set the standards for all associates in the retail industry. This type of leadership has a trickle-down effect within the organization.
Ethical leadership, however, is not easy. “Doing the right thing” is easier said than done. It often takes courage, competence and strong character to set the standards for your business associates, especially when there are so many conflicting views on how to behave.
A true leader is someone who leads with a moral or ethical compass, who can differentiate right from wrong, and who can lead compassionately and passionately. Today’s leaders must also demonstrate a strong functional knowledge, recognize emerging trends in society, and keep abreast of the latest trends and developments in the industry.
Above all, true leaders must be able to blend their management skills with their intellectual skills. They should have excellent real-world experience and, of course, high moral and ethical standards.
As today’s leaders, we must encourage and empower our junior associates to grow and develop into the ethical leaders of tomorrow.
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About the Author
Cynthia Silvia, DHA is a faculty member for the School of Business at APU. She is also a member of the faculty at Sacred Heart University in Connecticut. Dr. Silvia received a Master of Healthcare Administration and a Doctorate in Healthcare Administration from the University of Phoenix and a Bachelor of Arts and Master of Arts in Elementary Education from the University of Rhode Island. She has been teaching at the university level both online and on campus for the past three years.
Additionally, Dr. Silvia has held various retail management positions over the past 36 years for F.W.Woolworth/Woolco, Bradlees, Ames, Sears, Toys “R” Us and Babies “R” Us. She currently works for CVS Pharmacy.
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