Ethical Leadership

See Also: Living Ethically

When reading about ‘big business’ or perhaps banking, it can sometimes seem that leadership in large commercial organisations means working outside ‘normal’ ethics and beliefs, and operating in some kind of parallel world, where the only value that matters is how much money you’ve made. “The end justifies the means”, goes the saying.

More and more businesses and other organisations are recognising the value of ‘ethical leadership’: leadership which depends on navigation by ‘moral compass’. And many people are also commenting that we might not be in quite the same global economic position had a few more people behaved more ethically.

Stephen Covey, author of The 7 Habits of Highly Effective People, argues that leadership based on principles is not just a good thing, but essential.

He says that effective people live their lives and manage their relationships not around priorities but according to a series of natural laws, such as fairness, justice and integrity.

These values have underpinned life, both personal and business, for thousands of years, and continue to be crucial.

Natural laws, based on principles, operate regardless of our awareness of them or our obedience to them.

Stephen Covey, Principle-Centred Leadership

The Importance of Natural Laws

These natural laws or principles have been around for centuries. You might even describe them as the foundation of civilisation.

They surface in the ideas of religions, such as kindness, helping others, justice, fairness and equity, and some of them also run very deep. You have only to hear a child’s heartfelt howl of “It’s not fair!” to understand this.

Indeed, there is plenty of research that suggests that for most of us, it’s not so much how much we’re getting in absolute terms, as that we’re getting ‘our fair share’.

See our page: Justice and Fairness for more information.

Covey believes that we instinctively trust those whose lives are based on these principles of natural justice, fairness and equity. That may be because values, beliefs and principles are relatively hard to change, so we instinctively understand that those who demonstrate these natural law-based principles will be trustworthy.

You can change the way you behave relatively easily, but not the values that underlie that behaviour, and which are underpinned by these principles.

See our page on Dilts' Logical Levels for more.

Four Levels of Principle-Centred Leadership

Covey identifies four levels of principle-centred leadership, each with a central principle.

These levels are:

  • Personal, where the central principle is trustworthiness;
  • Interpersonal, where the central principle is trust;
  • Managerial, where the central principle is empowerment; and
  • Organisational, where the central principle is alignment.

The personal is about your relationship with yourself, and trustworthiness is how far you can be trusted by others.

It depends on two inter-related elements, your character, or what you are like, and your competence, how good you are at what you do. It makes sense that both aspects are important, because it doesn’t really matter how strong your character is if you are not competent to deliver what you’ve promised.

The interpersonal level is about your relationships with others, and trust develops from trustworthiness.

It is probably not too strong a statement to assert that trust is at the heart of every strong, successful relationship, whether personal or business, and that trust, or lack of it, also underpins most human interactions.

The managerial level is about how you work with those you manage, and particularly about empowerment. When you trust people, you don’t control them or supervise them. They control and supervise themselves: they are empowered.

Finally, the organisational level is about the structure of the whole organisation.

It may be easier to think first about an organisation where employees are not trusted: there is close control by management, constant supervision and checking-in, and employees have to report back frequently on what they’re doing. As a result, managers cannot manage many people directly, so the span of control is very small

By contrast then, an organisation where employees are trusted is usually flat rather than hierarchical, and with wide spans of control. Individuals within the organisation are trusted to do their jobs well, and without constant supervision: they are aligned.

These four levels are inter-dependent. Each is necessary but not sufficient, and a problem that superficially seems to be at one particular level is likely to need to be worked on at all four at the same time.

The Final Piece of the Jigsaw

The final piece of the ethical leadership jigsaw is the concept of ‘inside-out’.

To live and work ethically, you have to understand that first and foremost, the issue lies with you. It is very easy to stand up and blame others, but the concept of ‘inside-out’ suggests that to see change, you need to change yourself.

Inside-out or Outside-in?

If you are unhappy with any relationship or situation, you can try to change it by altering the externals, including other people (outside-in), or you can change the way that you see it, and the way that you behave within it (inside-out).

Inside-out requires you to start with yourself, and particularly your character, beliefs and values.

  • If you want to be trusted, show that you are trustworthy.
  • If you want more responsibility, show that you are capable of and can be trusted to accept it.
  • If you want a happy marriage, be a person who is happy in their life, and generates positive energy.
  • If you want a pleasant teenager, be an understanding, supportive and fair parent.

It takes more care and trouble than complaining about others, and suggesting that they should change. But it is likely to lead to longer-lasting change.

Further Reading from Skills You Need

The Skills You Need Guide to Leadership

The Skills You Need Guide to Leadership eBooks

Learn more about the skills you need to be an effective leader.

Our eBooks are ideal for new and experienced leaders and are full of easy-to-follow practical information to help you to develop your leadership skills.


Ethical leadership requires navigation by ‘moral compass’. It requires you to abandon the idea that ‘the end justifies the means’, and instead embrace the idea that maybe it’s the other way round.

Not all your decisions will necessarily be popular, but an ethical leader, whose life and leadership is centred on principles, will find that they have true power, in that they and their decisions are trusted by those who follow them.