Over the centuries, management gurus from Peter Drucker to modern strategists like Michael Porter have developed various leadership styles based on empirical research. Prominent among these styles are authoritative, delegative, participative, transformational, transactional, and servant leadership. While these styles have been thoroughly examined, ethical leadership—though equally crucial—did not receive the same level of focus in earlier studies.
Perhaps unethical incidents were less visible in the past, but the 21st century has seen an alarming rise in corporate scandals, highlighting the pressing need for ethical leadership. Take, for instance, the Enron scandal of 2001. Not only did it lead to the dissolution of the global accounting firm Arthur Andersen, but it also caused the collapse of Enron, one of the largest companies in the US energy sector. The very next year, in 2002, WorldCom—then the second-largest long-distance telephone company in the US—collapsed due to accounting fraud. Fast forward to 2008, and we saw the fall of Lehman Brothers, one of the largest investment banks, which sparked a global financial crisis.
In India too, the last two and a half decades have been similarly plagued by corporate and banking frauds. The Satyam Computer Services scandal in 2009, Kingfisher Airlines’ financial fraud in 2012, and the 2018 Punjab National Bank fraud involving Gitanjali Gems are prominent examples. Many other frauds, involving unscrupulous promoters colluding with senior banking officials, have led to the insolvency and bankruptcy of companies. While some of these cases have come to light, numerous others remain undiscovered or unreported.
Based on my three decades of leadership experience across geographies and a decade of research into corporate governance, the conclusion is clear: ethical leadership is not just desirable—it is essential. Organisations led by ethical leaders, particularly at the CEO or Managing Director level, achieve better operational and financial results compared to their peers.
An ethical leader builds a core leadership team with a strong focus on integrity and transparency. This culture of ethics cascades throughout the organisation, fostering a workplace environment where accountability, mutual trust, and respect flourish. Ethical leaders lead by example—they communicate openly, take responsibility, embrace change, and enforce a zero-tolerance policy for unethical conduct. These leaders transform toxic work cultures into workplaces where employees thrive, fostering both enjoyment and productivity.
One of the hallmarks of ethical leaders is their creative problem-solving ability. They conduct in-depth diagnostic studies to identify organisational challenges, encourage "out-of-the-box" thinking, and leverage the company's strengths to seize growth opportunities. These leaders don’t just manage—they inspire. They cultivate a culture of possibility, where "nothing is impossible" becomes the guiding principle, turning challenges into opportunities for business turnaround.
Ethical leaders also pay close attention to talent acquisition, ensuring that new hires align not only with the company’s functional needs but also with its ethical standards. Through robust interview processes that address domain expertise, behavior, and ethical decision-making, they create teams that drive sustainable success.
The time has come to prioritise ethical leadership. Promoters, business owners, and boards must seek out leaders who exemplify integrity and ethics. In doing so, they will not only create value for stakeholders but also build organisations known for being the best places to work, with satisfied, high-performing teams.
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