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L
Leadership, Ethics, and Decision-
Making
Jessica A. Scholl1, Helen J. Mederer2 and
Richard W. Scholl3
1
Scholl Advisory, EU Business School, Munich,
Germany
2
Schmidt Labor Research Center, University of
Rhode Island, Kingston, RI, USA
3
University of Rhode Island, Kingston, USA
Synonyms
Ethical decision-making; Leadership style; Moral
managers; Problem solving; Transformational
leadership
Introduction
The leadership, ethics, and decision-making
nexus is complex; yet many scholars posit a direct
relationship between ethical behaviors influenced
by leaders and enhanced organizational perfor-
mance (Brown and Treviño 2006; Detert
et al. 2007; Ehrhart 2004; LePine et al. 2008).
Furthermore, given the aggregate number of
issues encompassed within the term “ethics,”
there are few management decisions free of any
ethical component. Decision-making is embedded
in the concept of leadership, as those who have the
authority and the ability to make informed, well-
# Springer International Publishing Switzerland 2016
A. Farazmand (ed.), Global Encyclopedia of Public Administration, Public Policy, and Governance,
DOI 10.1007/978-3-319-31816-5_2407-1
reasoned, and timely decisions are often viewed as
leaders. Early research in the field of organiza-
tional behavior established an understanding of
decision-making processes as essential to an
understanding of the behavior of organizations
(Cyert and March 1963; March and Simon
1958). Despite such a clear overlap, leadership,
ethics, and decision-making are often discussed in
isolation from one another or through paradigms
that propose relatively new concepts rather than
integrate existing ones. However, through an anal-
ysis of well-established paradigms in each of
these areas, as well as the leading thought on
ethical leadership and ethical decision-making, a
clear depiction of the interdependency among
leadership, ethics, and decision-making begins to
emerge.
More specifically, decision-making is a
dynamic mechanism through which ethical
leaders influence ethical behavioral outcomes of
group members. To understand how this relation-
ship functions, it is important to distinguish
between the two widely established components
of ethical leadership: moral person and moral
manager. A leader who is moral person and self-
identifies as a moral person or possesses a moral
identity is more likely to integrate ethics into their
decision-making processes and, thus, produce
ethical outcomes. A moral person is someone
seen as possessing trustworthiness, integrity, and
honesty. As a moral manager, a leader will inform
the decision-making of group members by role-
modeling behavior as a moral person,
2 Leadership, Ethics, and Decision-Making

communicating relevant information, as well as
strategically using rewards and punishments to
develop group members’ capacity for ethical
decision-making on their own (Treviño
et al. 2006). This chapter will present and discuss
the research on how leaders can establish them-
selves as moral people and moral managers.
and intentionally exclude any ethical consider-
ations from factoring into their judgments.
Unintentionally amoral managers lack the
moral awareness and ethical perception needed
to realize the ethical components of decisions.
Regardless of intentionality, amoral managers
fail to provide the ethical guidance their
organizations need.

Theoretical Frameworks: Ethical

Ethical Decision-Making Models
Leadership and Ethical Decision-Making
Ethical decision-making models provide a frame-
work for understanding the specific ways in which
Decision-making is embedded in the intersection
leader qualities and behavior affect certain behav-
between ethics and leadership. Based on leading
ioral outcomes among organizational members.
research in the area, Brown and his colleagues
Closely aligned with traditional decision-making
define ethical leadership as “the demonstration
process models, Rest (1986) outlined a process for
of normatively appropriate conduct through per-
ethical decision-making based upon four steps:
sonal actions and interpersonal relationships, and
moral awareness, moral judgment, moral inten-
the promotion of such conduct to followers
tion, and moral action or behavior. The initial
through two-way communication, reinforce-
moral awareness step, similar to problem identifi-
ments, and decision-making” (Brown
cation in the rational decision-making model, rec-
et al. 2005, p. 120).
ognizes the moral aspect, dilemma, or component
of a situation. The moral judgment step,
Moral Versus Amoral and Immoral
encompassing the establishment and evaluation
Management
of criteria and alternatives, involves deciding
Immoral managers make decisions that are discor-
whether potential actions are ethical. Intention,
dant with the ethical standards of an organization
or the selection of a moral alternative over others,
or society, in general. They actively choose
establishes the goal of moral action. Finally,
options or adopt behaviors they know to be
behavior, or implementation, describes engage-
unethical in order to pursue some other aim. An
ment in ethical actions. Throughout this process,
immoral manager’s motives are often selfish and
variables related to the individual, organizational,
unsupported by any moral philosophy. At the
or situational context and moral intensity of the
extreme, they do not consider stakeholder inter-
issue moderate and mediate outcomes. This
ests, unless these interests benefit the manager,
framework is useful for understanding both how
when making decisions, and show little regard
a leader makes ethical decisions and influences
for those who stand between them and their
those of others.
interests.
Moral intensity plays a moderating role
It is important to note that moral management
throughout the decision-making process. When
stands in contrast to not only immoral manage-
the magnitude of consequences is great, social
ment, but amoral management. Amoral managers
consensus is strong, probability of effect is high,
that simply fail to recognize the moral compo-
temporal immediacy and geographical proximity
nents of decision-making in organizations can do
exist, effect is concentrated, decision-makers self-
so intentionally or unintentionally. Perhaps not as
identify with those affected by the decision, and
nefarious as immoral managers, amoral manage-
resultant moral intensity is shown to lead to
ment can be just as damning ethically to an
greater moral awareness, better moral judgment,
organization.
moral intent, and moral action (Brown and
Intentionally amoral managers believe that
Treviño 2006).
business decisions can be isolated from ethics
Leadership, Ethics, and Decision-Making
Leaders as Moral Persons and Ethical
Decision-Making
Leaders are seen as moral persons when they
demonstrate certain traits, behaviors, and
decision-making patterns. Critical traits include
integrity, trustworthiness, and honesty. The
corresponding behaviors generally reveal a con-
cern for other people, openness, and a personal
morality (Treviño et al. 2000). While it is impor-
tant that these traits and behaviors be recognized
as ethical from an external perspective, a leader
that self-identifies as a moral person – otherwise
known as having a moral identity – will more
successfully make ethical decisions and influence
others to behave in ethical ways (Mayer
et al. 2012). Indeed, studies reveal moral identity
to be a robust indicator of organizational ethical
outcomes (Mayer et al. 2012).
Moral Person and Awareness
The literature establishes several mechanisms
through which a leader’s moral person influences
the decision-making process. In the initial stage, a
person that self-identifies as ethical will have
greater moral awareness, or the ability to recog-
nize the ethical component of an issue or decision.
According to Lapsley and Lasky, a person who
has a moral identity is “one for whom moral
schemas are chronically available, readily primed,
and easily activated for information processing”
(2001, p. 347). Thus, leaders who are moral per-
sons will naturally consider relevant ethical issues
when making a decision or at a minimum recog-
nize where a moral dimension might need further
consideration.
Moral awareness assumes an above-average
familiarity with a broad range of ethical issues.
However, there are leaders considered to be
moral persons that simply have never been
exposed to certain issues or had cause to consider
them. Moral persons aiming to be ethical leaders
can employ certain strategies, such as stake-
holder engagement or participative decision-
making, to counteract deficiencies in moral
awareness.
3
Moral Person and Judgment
The judgment stage of the decision-making pro-
cess is influenced by the cognitive thought pro-
cesses of a moral person, or moral judgment.
Kohlberg’s (1969) theory of cognitive moral
development proposes three levels of develop-
ment to differentiate the reasoning processes
used when making moral judgments. A moral
person can be said to have advanced to the final
or postconventional, autonomous, principled
level within Kohlberg’s moral development
schema. Within each level, two stages exist to
further differentiate development. Once reaching
the final level, a moral person can reside at stage
5 – social-contract orientation – or stage
6, universal-ethical-principle orientation. Both
stages are characterized by an emphasis on the
universality of individual rights and ethical prin-
ciples. Thus, a moral person would likely seek and
weight criteria based on the moral philosophy to
which he or she prescribes. An ethical
consequentialist – someone who evaluates the
ethics of a decision based on the outcomes of
that decision rather than the actions employed to
produce said outcomes – would include effects of
a decision within the list of criteria analyzed. On
the other hand, an ethical formalist – someone
who determines the ethics of a situation based on
the actions taken or means rather than effects or
ends – would only identify criteria related to a
specific behavior rather than the outcomes of
such behavior. Werhane (1999) suggests that
moral imagination is needed to generate decision
alternatives that recognize and address the norms,
relationships, and social roles interfused within
the situation. Once alternatives are developed, a
moral person may evaluate them based on which
best promotes the fair treatment of people
(principle of justice), best protects an individual’s
moral and legal rights (principle of rights), or
produces the greatest good for the greatest number
of people (has the greatest utility principle of
utilitarianism).
Moral Person and Intention
The personal morality of a leader influences the
way in which alternatives are selected at the inten-
tion stage of the decision-making process.
4 Leadership, Ethics, and Decision-Making
Theoretically, a person with greater moral aware-
ness would be less likely to use subconscious
decision-making biases that lead to unintended,
unethical outcomes. Because they prioritize moral
values over others (Rest 1986), their selections are
less likely to be based on mental schemas respon-
sible for biased decision-making. Mental schemas
are often unintended yet still self-serving. How-
ever, even individuals with high morality have
unconscious biases or use decision-making heu-
ristics, or shortcuts. Specifically, four sources of
unconscious influence have been suggested as
particularly common, including implicit forms of
prejudice, self-serving biases, conflicts of interest,
and fundamental attribution errors. The funda-
mental attribution error is the tendency to
overclaim credit when things go right and blame
others when things go wrong. Other dangerous
biases may include anchoring adjustment, avail-
ability heuristic, escalation of commitment, hind-
sight, correlation and causality bias,
overconfidence, framing, satisficing, familiarity
(greater willingness to harm strangers), and
discounting (minimizing or ignoring decisions
that do not have immediate consequences). Rec-
ognizing the existence of these biases or heuris-
tics, a moral person can seek to consciously avoid
them when identifying and selecting a moral
alternative.
Several studies establish a direct causal link
between moral identity and ethical leadership,
explaining that a strong perception of oneself as
moral functions as a self-regulatory mechanism
motivating moral action (Aquino et al. 2009;
Mayer et al. 2012). Leaders whose main source
of motivation is the desire to reinforce an ethical
self-concept, either in their own eyes or through
those of others, will demonstrate moral intent.
Moral Person and Moral Action or Behavior
The issue of moral agency arises at the behavior or
implementation stage of the decision-making pro-
cess, as leaders that are moral persons likely have
the capacity to act with reference to right and
wrong. In other words, they are likely to have
the resources, legitimacy, and knowledge to trans-
form a moral intent into a moral action. To illus-
trate, two members of an organization witness the
CEO alter financial reports to make it appear as if
he’d been more effective during his tenure. Both
members share similar levels of organizational
commitment and recognize the unethical action
as harmful to the general welfare of the organiza-
tion and want to protect the organization by
reporting the CEO. While one member is a
low-level accountant with limited job security
and power within the firm, the other is the Chief
Financial Officer, who reports directly to the
Board of Directors. In this scenario, both
employees share similar levels of moral aware-
ness, moral judgment, and moral intent but, differ
in their ability to realize their intent through
action. Even if the accountant was able to report
the CEO’s actions to the Board, he may choose to
believe the CEO, with whom he likely have a
relationship, over a low-level, expendable
employee. Alternatively, the CFO may have
stronger moral agency to take moral action in
that she has the credibility and access to convince
the Board of the CEO’s transgression.
Leaders as Moral Managers
and the Influence on the Decision-
Making of Others
Being a moral person is essential to being an
ethical leader, but this quality alone does not
enable a leader to consistently influence the
decision-making of others. In addition to demon-
strating personal morality, ethical leaders are
moral managers. As a corollary to moral person,
the concept of moral management captures the
components of ethical leadership that relate to a
leader’s interaction with group members and the
organization.
While it is important for leaders to contribute to
the design, development, and implementation of
formal policies, structures, and systems intended
to guide ethical decision-making, these actions
alone do not constitute moral management.
Trevino and Brown (2004) note that one of the
largest myths surrounding business ethics says
that ethics can be managed solely through formal
ethics codes and programs. While leaders should
ensure the existence of standards, training, advice
Leadership, Ethics, and Decision-Making
lines, and reporting mechanisms, these elements
will only increase the likelihood that observed
misconduct will be curtailed or reported (Treviño
and Brown 2004). In other words, leaders aiming
to affect ethical outcomes must not only create a
formal framework that informs, places incentives,
and constrains decision-making but also must
manage morally by using their power and position
to ensure employees are informed, socialized, and
empowered to behave in a way that reinforces the
said framework. Thus, leaders that can be defined
as moral managers role model ethical behavior,
communicate consistently about values and
ethics, and use reward and control systems to
influence ethical behavioral outcomes. Addition-
ally, they are likely to employ participative lead-
ership and decision-making styles.
Leadership Styles
Leadership style is a variable developed to
describe the way leaders interact with their group
members when making decisions and attempting
to influence the behavioral direction of the group.
While many descriptive versions of leader style
have been proposed, most of them can be grouped
into three distinct categories. The categories are
described along three continua; autocratic versus
participative, transactional versus transforma-
tional, and task versus socio-emotional. Most
applicable to the analysis of moral management
in decision-making is the autocratic–participative
continuum.
Leader’s Decision-Making Style
Moral managers may employ a stakeholder
engagement strategy to inform each stage of the
decision-making process. In this manner, a
leader’s decision-making style can moderate the
impact of personal morality on ethical outcomes.
The literature plots styles in relation to two axes:
(1) level of group engagement in decision-making
presets (problem identification or awareness,
alternative generation, and evaluation or judg-
ment) and (2) level of group involvement in actual
alternative selection and implementation. Leaders
with autocratic styles demand limited input from
group members, while participative styles encom-
pass various levels of participation on both axes.
5
While autocratic styles can be seen as a means of
output control, they rely too heavily on one per-
son’s ability to recognize the full breadth of moral
components in decisions, to weigh criteria and
alternatives fairly, and to make selections absent
of the influence of bias.
Participative decision-making styles can coun-
teract an individual’s own moral limitations. By
engaging others, a leader can draw on collective
insight and various perspectives to identify impor-
tant moral components of decisions. Group and/or
stakeholder input can limit a leader’s personal
biases in the weighing of criteria and evaluation
of alternatives. Collaboratively selecting an
option, in effect, employs several ethics tests.
The test of making something public, or disclo-
sure rule, tests whether a decision can withstand
public disclosure or scrutiny. The test of ventila-
tion exposes an intention to stakeholders with a
diversity of viewpoints to determine how well it
takes into consideration different perspectives.
Thus, the logical conclusion is that the wider the
variety of stakeholders engaged, the more likely
ethical missteps can be flagged and better alterna-
tives developed.
Leader’s Influence Approach
There are many models that present typologies of
the way in which leaders attempt to influence the
behavior and decision-making of their work mem-
bers. For example, French and Raven (1959) pre-
sent an often used typology of the five bases of
power. Etzioni (1975) argues that organizations
and their leaders influence behavior in three fun-
damental ways which he calls coercive power,
remunerative power, and normative power.
Another approach is presented by Walton (1985)
who suggests that organizations have an array of
influence strategies ranging from control to com-
mitment strategies. Finally, leaders can adopt and
seek to influence by employing a style that falls on
the transactional–transformational leadership
spectrum.
Transactional leaders use exchange, rewards,
and coercion to direct the behavior of group mem-
bers. They rely on coercive, reward, and legiti-
mate basis of power. They follow the tenets of a
control strategy of human resource management.
6 Leadership, Ethics, and Decision-Making
They use Etzioni’s coercive and remunerative
forms of control.
Transformational leaders use French and
Raven’s expert and referent power bases, follow
a commitment strategy, and use Etzioni’s norma-
tive control.
The ways in which leaders influence ethical
behavioral outputs can be explored further
through the control mechanisms used by organi-
zations (Katz and Kahn 1966). Within control
mechanisms, there are four general processes
through which leaders can reduce human variabil-
ity in decision-making: centralization, formaliza-
tion, output control, and enculturation.
Centralization
The use of centralization as a behavioral and
decision-making control strategy requires that all
decisions made by group members are ultimately
approved by the group’s leader. On the decision-
making continuum ranging from autocratic to par-
ticipative, this is clearly on the autocratic end.
While this may ensure that all decisions originat-
ing from this work group conform to the organi-
zation’s ethical standards, it relies heavily on the
assumption that the leader is an ethical person
who knows and conforms to these standards.
While this strategy may accomplish the goal of
conformity to standards, it is a slow process in
which the work group will not be able to react to
changing demands and respond to crises. Addi-
tionally, group members are unlikely to be pre-
pared for ethical leadership if the group’s leader
moves on.
Formalization: Developing Reward
and Control Systems
Formalization is the development and enforce-
ment of a set of rules, policies, behavioral guide-
lines, and procedures designed to control the
behavior and decision-making of organizational
members. Systems designed to control the way
work outcomes are performed are called process
controls. Outcome controls are an alternative type
of control systems designed to control work out-
comes directly. These systems use outcome mea-
sures such as goals, quotas, and objectives. An
important role of top leadership is to develop these
systems in a way that is clear, is relevant, is easy to
understand, and is not in conflict with other
important organizational objectives and perfor-
mance requirements.
Another important element of a process control
system is the means used to enforce behavioral
standards. These are generally either rewards of
sanctions for compliance or noncompliance to the
standards. The standards can be established as a
set of stand-alone codes, as in a published code of
ethics, as part of a disciplinary system, or inte-
grated into the performance appraisal system of an
organization. Likewise, the rewards and sanctions
can be applied directly to compliance or
noncompliance or tied to the performance
appraisal process, as in merit pay systems. While
rewards can be used as part of the control struc-
tures, sanctions usually depend on coercive power
to enforce rules, that is, formal negative sanctions
and punishment for rule violations. When sanc-
tions are publicized, there is possibility of vicari-
ous reinforcement in the form of social learning,
when organizational members learn about the
consequences of certain important violations.
Process control systems become a central com-
ponent of an organization’s structure. Some orga-
nizations have formal structures, called
mechanistic structures, while others have rather
loose structures with fewer process or behavioral
control, or organic structures. In the ethical
decision-making literature, there has been a lot
written about establishing and applying conse-
quences to violations of ethical standards (James
2000). In some cases these have been proven to be
very effective in reducing ethical misconduct and
breaches. Code of conduct, code of ethics,
whistle-blowing policies and support, transpar-
ency measures, hotlines, trainings, formal sanc-
tions, and communication policies are just some
of the approaches used by organizations (Lindsay
et al. 1996).
While formalization as an approach can be
effective if correctly applied, leaders have
reported some problems with this approach. Orga-
nizations find that they cannot establish rules for
every contingency, and some decisions are so
embroiled in uncertainty and the need to act
quickly that they have to give decision-making
Leadership, Ethics, and Decision-Making
more autonomy and fewer constraints. When
decision-makers are given more autonomy, orga-
nizations have to rely on individual group mem-
bers’ ethical decision-making ability. Leaders find
that they cannot monitor all behaviors and deci-
sions made by their work group members leaving
open the likelihood that many violations go
unchecked. Another issue facing leaders
performing in mechanistic structures is that they
cannot develop rewards and sanctions for all rules.
Some of these issues can be taken care of through
increasing the internalization by work group
members of important ethical standards, the
development of a system of social sanctions to
replace leader monitoring and formal sanction,
and the use of systems of output control. These
are discussed in the next sections.
Output Control: Infusing Ethical Standards
into Goals
When organizations operate in dynamic environ-
ments, it is difficult to respond to the changing
needs and demands of their stakeholders with
mechanistic structures, characterized by a myriad
of complex rules and procedures. To be more
effective at adapting to these changes, firms
adopt more organic organizational structures,
characterized by flatter structures and fewer set
procedures. Leaders must develop ways to control
work group member behavior without relying on
process or behavioral control methods. They turn
to output of outcome-based methods. Control is
achieved through processes such as goal setting,
developing quotas, and maybe performance eval-
uation metrics.
Outcome control procedures hold group mem-
bers accountable for the results of their work and
not the means used to achieve them. Total out-
come measures, say to workers, get results by any
means possible. When decision-makers are free to
achieve results by whatever means available, they
can react more quickly to changing stakeholder
demands, but it leaves organizations wide open to
ethical breaches. Other issues with a goal-based
approach are that all work performance cannot be
assessed in terms of outcomes, some outcomes
cannot be accurately measured, and the
7
achievement of many goals cannot be attributed
to a single individual.
There are a couple of ways to deal with this
ethical dilemma. The first is to move from a total
goal focus to a goal focus with constraints. In fact,
this is what most organizations do as few organi-
zations give employees total autonomy without
consideration of laws or other standards. The
task facing leaders is which ethical standards to
enforce within the goal-based system. The second
solution is to couple a goal-based approach with
an approach that works to internalize ethical stan-
dards into the decision-making and motivational
processes of work group members. These encul-
turation methods are discussed in the next section.
Enculturation and Role Modeling
One of the most effective ways to increase the
likelihood of the use of ethical standards in orga-
nizational decision-making is by developing a
strong organizational culture or, more specifically,
a strong ethical culture (Mayer 2014). A strong
culture is defined as having a defined direction, or
course, which drives the organization, pervasive-
ness, or how widely the cultural elements are
shared among members, and strength, or the
degree of influence the culture has on organiza-
tional members (Kilmann et al. 1986). Cultural
control mechanisms include social norms, shared
values, shared mental models, consensual
schema, and social identities. Ethical cultures
use all of these mechanisms at various times and
to different degrees. There are a number of things
leaders can do to establish strong ethical cultures.
These include role modeling, communication,
reinforcing the social identity of group members,
enacting more participative leadership styles, and
developing more transparent decision-making
processes.
Role-Modeling Ethical Behavior
One of the most significant pathways through
which to influence member behavior is through
role modeling – or the demonstration of certain
behaviors with the aim of emulation. Social learn-
ing theory (Bandura 1986) posits the ability to
learn appropriate behaviors through observing
the behavior of others. “Group members exposed
8 Leadership, Ethics, and Decision-Making
to similar cues in an environment regarding norms
for appropriate behavior tend to behave in a fairly
homogeneous manner” (Mayer et al. 2012,
p. 152). Thus, it is important to dissect the ways
in which a leader’s behavior can influence group
members at each stage of the decision-making
process.
A leader that consistently recognizes and inte-
grates moral issues into decision-making demon-
strates a level of moral awareness that group
members can emulate or seek to develop. Theo-
retically, group members that consistently witness
leaders addressing ethical issues will develop
greater moral awareness, enhancing their ability
to recognize the moral components of issues at the
initial stages of the decision-making process.
Determining and communicating is considered
a single process considers ethical is one of the
most significant challenges to creating an ethical
organization. Yet, group members need this
criteria to develop ethical alternatives. Through
their own actions and decisions, moral managers
demonstrate what the leadership views as ethical,
clarifying any ambiguity employees may have or
sense.
Beyond basic clarification, role modeling also
sets expectations for group member behavior. For
instance, leaders with high moral identity inter-
nalization define success by the way results were
achieved, as well as what was achieved (Mayer
et al. 2012). Group members observing this
behavior will likely prioritize alternatives that
align with this philosophy in the judgment and
intention stages of the decision-making process.
Finally, a leader can demonstrate how to trans-
late moral intent into moral action. A leader gen-
erally operates within the same organizational
systems and structures as group members. Thus,
group members can learn how to implement a
moral decision within these confines or through
these systems. For instance, one leader may
address employee misconduct in small group
meetings, while another may arrange one-to-one
discussions, thus highlighting the most appropri-
ate forum for raising issues regarding ethical mis-
conduct among employees.
The extent to which role-modeling ethical
behavior will influence the decision-making of
group members depends upon two factors. First,
a moral manager must demonstrate cross-
situational behavioral consistency to ensure that
any particular decision is not viewed as idiosyn-
cratic; rather that it is based on a world view that
reflects a set of ethical principles. Second, group
members are more likely to emulate and internal-
ize leader behavior when a leader’s power stems
from innate characteristics such as expertise, legit-
imacy, and identification, rather than actions as
with coercion and reward.
Reinforcing Social Identity
The social identity of individuals is a very impor-
tant component of their self-concepts which
drives a large portion of their decisions (Ashford
and Mael 1989). Social identities can be centered
on sources such as professions, social groups,
location of origin, or work organizations. One
driver of social identity is a closeness of values
between the source entity and the individual. Indi-
viduals take on the social identity of their work
organization when, among other variables, the
organization’s espoused social values and the
individual’s social values are aligned. When
employees make decisions and behave in ways
consistent with these values, leaders can recog-
nize the importance of these actions and validate
these values as part of the individual’s self-
concept.
Participative Decision-Making
When leaders move along the continuum from
autocratic toward participative, they open up a
number of human resource development strate-
gies for increasing their organizations’ capacity
for ethical decision-making.
Group decisions are decision process in which
leaders meet with their work groups to make a
decision or to solve a problem. These process can
range from a process in which leaders present the
problem, decision criteria, and alternatives they
are considering and ask for consultation, through
processes where leaders present the problem and
engage the groups to develop criteria and alterna-
tive solutions, but leaders make the final choice,
all the way to full group participation with the
groups empowered to complete all steps of the
Leadership, Ethics, and Decision-Making
problem-solving process and the leader taking on
a process facilitator role.
Leaders can be instrumental in establishing
decision-making or problem-solving constructs,
prototypes, or models that ensure important stake-
holders are considered in establishing criteria,
ensure criteria set also includes the company’s
ethical standards, develop search processes that
are likely to discover or create innovative solution
alternatives, and ensure alternatives are evaluated
by the criteria set established by the group. Effec-
tive leaders also use group decisions to teaching
group members skills like stakeholder interest
analysis, means–ends analysis, moral awareness,
and moral imagination.
The Leadership, Ethics, and Decision-
Making Nexus in Practice
The constellation of moving parts that result in
leaders embodying and promoting ethics in their
organization is complex. For this reason, many
organizations have implemented ethics programs
to provide the guidance and oversight needed for
ethical behavioral outputs. Those leading these
initiatives, generally termed ethics officers, are
the formal manifestations of ethical leadership.
Ethics officers have the arduous task of setting
the organizational standards for moral personhood
and moral management. At the same time, they
are often responsible for ensuring the appropriate
situational or organizational factors are in place to
guide organizational members in their ethical
decision-making. These factors include written
standards of conduct, mechanisms to seek ethics
guidance, integration of ethical conduct into per-
formance evaluations and incentive systems, and
proper channels for reporting misconduct or
whistle-blowing.
As discussed above, individual factors, such as
values and consistency of individual values with
organizationally espoused values, moderate the
role of ethics in an employee’s decision-making.
Thus, ethics programs would not be complete
without training programs aimed at cultivating
greater moral awareness, moral intensity, moral
judgment, and moral behavior in the individual.
9
The placement of ethics officers in organizational
hierarchy and the ability to “manage ethics
upward” are two important determinants of the
effectiveness of ethics officers.
As part of its ethics program, Texas Instru-
ments has created a wallet-size “Ethics Quick
Test” card for employees to carry. The test
includes the following questions:
1. Is the action legal?
2. Does it comply with our values?
3. If you do it, will you feel bad?
4. How will it look in the newspaper?
5. If you know it’s wrong, don’t do it.
6. If you’re not sure, ask.
7. Keep asking until you get an answer.
Texas Instruments, “Ethics Quick Test” (Texas
Instruments Ethics Office), wallet card. Source:
(Carroll and Buchholtz 2014, p. 347.
Conclusions
Leaders shape organizations through the deci-
sions they make. Therefore, an organization
aiming to be ethical will need ethical leaders
who make ethical decisions. Furthermore, leaders
influence the way others make decisions. A moral
person is a precondition to develop a moral man-
ager. Moral managers influence organizational
members to behave in ethical ways to bring forth
ethical organizational outcomes. Ethical out-
comes have been found to enhance organizational
performance.
Ethical decision-making models posit that eth-
ical leaders need to both demonstrate and promote
ethical decision-making through increasing
awareness, role-modeling ethical judgment, and
integrating values that demonstrate intention. Eth-
ical behavior as both process and outcome also
needs to be validated to influence ethical behavior
in employees.
As moral managers, organizational leaders
influence the decision-making of others through
informing, incentivizing, and empowering others
to follow formal policies. The accomplishment of
10
these leadership tasks is affected by leadership
styles and decision-making styles and by leaders’
influence approach. They are also modified by the
specific control mechanisms used by organiza-
tions such as the degree of centralization and
formalization of reward and control systems.
One of the most effective ways to elicit ethical
behavior is enculturation through role modeling
of ethical behavior. Especially relevant is leaders’
ability to role model the translation of intent into
action. Ethical leadership is most effective when
leaders are consistent across situations in model-
ing ethical decision-making and when their lead-
ership behavior stems from “moral person” traits.
A key element of enculturation is to reinforce
employees’ social identities through noting the
compatibility of employees’ personal values and
organizational values. Participative leadership
also is the most effective leadership style in
influencing ethical behavior in decision-making.
Many organizations implement formal ethics
programs and structures to provide the guidance,
oversight, and accountability for promoting ethi-
cal behavior. These help organizations set ethical
standards and put in place the appropriate struc-
ture (organizational and situational factors) that
enable organization members to follow the orga-
nization’s ethical standards. Thus, both ethics pro-
grams and accountability structures are necessary
conditions to promote leadership in ethical
decision-making.
Cross-References
▶ Code of Ethics
▶ Ethical Competence
▶ Ethical Decision Making: An Applied Structure
Addressing Ethical Challenges
▶ Ethical Leaders
▶ Ethics and Organizational Culture
▶ Ethics Offices
▶ Leadership and Ethical Performance
Leadership, Ethics, and Decision-Making
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