Ignite Your Leadership Journey

Leadership and Growth – Ethical Leadership in Times of Organizational Change and Why It Matters

Have you ever wondered why Ethical Leadership in Times of Organizational Change Matters?

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In the early days of my career, I witnessed a profound example of ethical leadership during intense organizational change. We were a company about to undergo significant change, and the staff was naturally on edge. During the commotion, our CEO held an unprecedented open town hall meeting, speaking about and expressing all our challenges in the future. Rather than play down the challenges, he homed in on the principles of honesty and how they desired to treat people with integrity with their catchphrase “the backbone” for all involved. This moment cemented his leadership standing and motivated us to adapt with character and grace. Later in my career, unfortunately, I witnessed other, less positive, memorable examples from which I also learned what not to do!

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Importance - Ethical leadership, particularly during organizational change, is critical. The only constant in today's business environment is change, brought about by technological changes, geopolitical changes, market dynamics, and changing consumer preferences. According to recent industry reports, the complexities of today's business landscape have made effective leadership a more significant challenge for many CEOs. The importance of ethical leadership comes into play in leading organizations through these troubled times - and still keeping the trust, morale, motivation, and confidence within that organization. Good leaders serve as ballasts, steadying ships in storm-tossed seas.

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Impact - Such transformation in the context of organizational change can be influenced by ethical leadership. For example, look at how Microsoft has been when Satya Nadella ran the shop. Things were looking pretty grim internally and externally at Microsoft when Nadella took over as CEO. Dr. Nadella's focus on a growth mindset, inclusivity, and ethical behavior were instrumental in changing that company's culture – but they also helped fuel a fantastic reversal: from Glasshouse to one certifying talent. Nadella made some of the necessary changes that brought new light to the company and encouraged employee innovation and teamwork, showing how ethical leadership counts on an institution’s actions. Many can learn from him!

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Challenges - Ethical leadership in times of change has many difficulties. Employees are suspicious of change and may need to trust their leaders. There is also pressure to get results fast; leaders might be tempted to take shortcuts or make decisions below the ethical bar. This is then where one must return and adhere to one's core values while communicating information openly and making painful choices to grow with principle. This includes making the change a shared challenge, giving concrete assurance and information to stakeholders in multiple ways at each step— throughout—and consistently sending messages that reinforce commitment from top leadership.

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Relevance for Boardrooms - Boardrooms must play a central role in the ethical leadership of moral order regarding any organizational change. Boards help set standards of ethics and guide the leadership team to uphold company culture. Organizations require guidance from their boards to promote the correct behavior. They are continually at risk of overreaching during change. These methods allow board members to contribute towards creating a resilient organization that can face challenges and stands without losing its identity. Board accountability and stewardship are crucial to preserving stakeholder confidence and ensuring that an organization's ethical commitments align with its strategic objectives.

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Global Perspectives - Ethical leadership during organizational change takes on different dimensions across various cultural and international contexts. In Japan, the concept of “Ikigai,” or a sense of purpose, often guides leadership practices, emphasizing the importance of ethical behavior and long-term vision. A strong focus on equality and corporate social responsibility in Scandinavian countries shapes how companies approach change. These global perspectives highlight that while the principles of ethical leadership are universal, their application can vary based on cultural and regional nuances. Global businesses need to respect and understand these differences.

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Expert Opinions - The importance of ethical leadership during change is something experts across countless disciplines constantly revisit. As a Harvard Business School professor, Max Bazerman, noted, “Ethical leadership is precious in creating trust and commitment that are particularly meaningful during times of uncertainty.” According to Indra Nooyi, former CEO of PepsiCo: “Leaders must be honest and transparent, especially when navigating change. It’s about doing the right thing even when it’s hard.” It’s about moral leadership and sacrifice, even when uncomfortable and challenging. These observations reinforce the idea that ethical leadership is more than compliance and about establishing a bedrock of trust, enabled by integrity, that underpins organizations when faced with disruption.

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Future Outlooks - As we move into an uncertain future, the prominence of ethical leadership in periods of organizational challenge will only become more critical. As organizations grapple with problems growing steadily more complex - digital transformation, climate change, etc. Keeping an ethical sensibility front and center will be essential for all leaders as they steer through these transitions. Trends like ESG (Environmental, Social, and Governance) integration into business strategies will continue to call for more human consideration. An organization engaging in ethical leadership will be more sustainable, adaptable, and innovative.

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Three Takeaways for our Boardrooms:

Takeaway #1: Incorporate Ethical Consideration into Core Strategy - Ensure that all strategic decisions are based on ethical considerations and reflect the company's mission and values.

Takeaway #2: Foster a Culture of Accountability - Encourage an organizational culture that recognizes financial performance and may urge transparency.

Takeaway #3: Set the Tone From the Top - Board members and executives should lead by example, showing in word and deed that they live ethical lives on all issues daily.

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Final Reflection - Leading ethically within the challenges of organizational change is a necessary strategic choice. Our choices today will determine the future of our entities and societies. Prioritizing ethics builds trust and enduring growth enjoyed by all stakeholders. This includes setting rules to be ethical in all things and ongoing education about it. We could include this, opening up debate on what is inappropriate and how we would like authority to behave. Ethical leadership during organizational change is not just a guiding light but the foundation upon which sustainable growth is built, ensuring that integrity and trust are never compromised in pursuing progress. Ethical leadership ensures that change and growth are achieved with integrity and respect for all involved.

Let us commit to leading with integrity, resonating the soundness that our businesses do not merely serve their shareholders but also leave a positive impact on the world.

I'd like to invite you to share your experiences and challenges related to ethical leadership during organizational change.

How have you integrated ethics into your change management strategies?

What obstacles have you faced, and how did you overcome them

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Embrace Your Leadership Journey by Building and Strengthening Ethical Leadership in Times of Organizational Change?

Ignite your Leadership Journey – Share Your Insights and Challenges in Ethical Leadership in Times of Organizational Change

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You might be able to check some of the topics talked about previously. See other articles

And if you want to empower Yourself on Your leadership Journey, check out my Book:

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"Rise Above And Empower Yourself" Indira Bunic

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