Along with complications among employees, companies are also skeptical about the ethics in today’s competitive world. One of the qualitative research estimated about sixty-six per cent employees doubt about the existence of ethics in leadership, situation often referred as “a crisis of trust” (Darcy, 2010, p. 200). The practice of non ethical behavior by the leaders give rise to these trust issues and is referred as the leadership’s “shadow side” which includes influences which are entirely negative in nature like privilege, inconsistency, power, power, deception, misplaced loyalties and irresponsibility (Frank, 2002, p.81). One can therefore sum up the ethical leaders characteristics by ones’ ability to establish honesty especially through their actions. Nevertheless, there are ambiguities in understanding the constituents of ethical leadership (Yukl, 2006) making it cumbersome to evaluate. Freeman & Stewart (2006), defines ethical leadership as “simply a matter of leaders having good character and the right values or being a person of strong character” (p. 2). The complications of ethical leadership do not arise from obeying the laid down laws and regulations or convincing the followers to behave in correct manner, but it lies in the gray areas of taking responsibility at the time of crisis (Plinio, 2009).
Martinez-Saenz (2009) highlights the constituents of ethical leadership in the form of five paradigms recognized as egoistic, altruistic, autonomous, communitarian and legalist. When due to self driven motives, ethical behavior is adopted by the leaders. It is said to be an egoistic approach. While the same is done with selfless intentions, it is altruistic impetus. In autonomous style, the followers are given free rein to decide their own ethical boundaries and in communitarian approach aim is to extend benefits to the community and society in which the company exists. The last paradigm legalist explains the need of following rules, regulations and law by the leaders.
Plinio (2009) illustrated three generally associated theories of leadership with the ethical behavior of the leaders. The first traditional theory of leadership closely correlated to the ethical leadership is called transforming leadership. In the transforming leadership approach, one can say that finally it attains moral grounds as leaders along with followers are inspired to uplift their ethical objectivity and human conduct to greater level. This approach affects both leaders and followers and transforms them (Burns, 1978, p. 134). The other theory is called servant
leadership in which the impetus is placed on the service of people or followers and devoting the self to their development on ethical level. The third traditional theory of leadership theory is called authentic leadership which describes that being truthful and authentic to oneself is the prime gist of being ethical.
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