What differentiates a positive organizational culture that enjoys a clean reputation and long-term success from a toxic culture drowning in scandals, mistrust, and legal fines? 

The answer: Ethical leadership. 

Starbucks has always prided itself in being an ethics-first organization. Out of their 14 board members, five are from racial minority groups and five are women. So, when the manager of a Starbucks outlet in Philadelphia called the cops on two black people who were simply waiting for their friend before making an order, the racially motivated incident clashed with the company’s core values. 

The outcome? Starbucks fired the manager, apologized to the victims, and made racial bias training mandatory for all their employees. While this training cost Starbucks an estimated “$12 million in lost profit,” it was a big win for the company – they got a powerful message across, “we care about our customers, employees, and society.”

The story of Starbucks teaches us why integrity and ethics – not mere profitability – allow businesses to stand the test of time. Here, we discuss what ethical leadership looks like in action and how leaders can tap into the power of integrity to create a culture of positivity, caring, understanding, truth, honesty, and success. 

Ethical Leadership in Action 

If you ever observe an ethical leader in action, here are the most common qualities you’ll find:

• Making integrity non-negotiable. For ethical leaders, integrity is non-negotiable. Regardless of how complex a situation seems, they always side with options that match their personal integrity and core values. 
• Bring true to themselves. Ethical leaders genuinely care about values like integrity, honesty, and transparency. They consistently display ethical behaviors because they’re true to themselves and commit to doing the right thing. 
• Clearly outlining and communicating their core values. Ethical leaders clearly communicate their core principles to their partners, employees, and customers and eventually build a culture of ethical decision-making. 
• Making every decision with ethics in mind. Ethical leaders prioritize integrity and honesty over profits to ensure their organization sustains long-term success. 
• Setting strong examples of ethics. Ethical leaders practice what they preach. They consistently operate with integrity, honesty, and transparency for their teams to learn and implement similar values.
• Holding themselves accountable. Ethical leaders set clear standards of ethical behavior and hold themselves and their team accountable for it. 

Employees always believe in leaders who operate with integrity. Ethical leaders aren’t afraid to side with the truth and stand for what they believe in. A strong sense of integrity in decision-making – even in the face of external challenges – is what enables them to create loyal customers, happy employees, and a better world. 

These leaders practice what they preach and don’t hesitate to hold themselves accountable for their mistakes.  Positive traits such as acting with honesty and prioritizing authenticity enable ethical leaders to navigate uncertainty, manage risks, and adapt and innovate even during crises. 

Transactional vs. Ethical Leadership 

Ethical leadership is not transactional.

Integrity in business brings results that are far beyond an improved bottom line. Sure, questionable activities may bring gains in the short term. But eventually, these gains transform into financial, legal, and reputational catastrophes. 

Achieving lasting success comes only from ethical business practices that rest upon positive core values. When leaders prioritize integrity, the resulting ripple effect spreads across every element of business – from customer satisfaction to improved employee morale. 

Another byproduct of leading with integrity is the creation of highly productive and motivated teams. When employees see their leaders consistently lead with integrity, the result is a culture of trust, respect, and innovation. 

In a world where consumers are hyper-aware of the way businesses operate, ethical leaders use the power of integrity that sets their organization apart in the marketplace. 

The Ethics of Profit 

It can be tempting to choose profit over integrity in today’s highly competitive business landscape. But a trip down history will reveal how (unethical) businesses built on weak foundations failed to stand the test of time. 

Prioritizing ethical practices over questionable business tactics is vital to establishing a strong moral compass that reinforces transparency, builds accountability, and results in long-term success. 

Employees today want to work with organizations that have a strong ethical foundation, focus on creating a positive work culture, and openly advocate for what’s right. The way a company’s image unfolds online is linked directly with the way leaders make decisions. 

Ethical leaders know that not everything that’s profitable (or legal) is ethical. When faced with difficult situations and complex ethical dilemmas, great leaders draw from their core values, consistently maintaining a positive brand image. 

In other words, ethics and integrity inspire loyalty, attract and retain top talent, create happy customers, and build a sense of trust among strategic partners. 

Ethics Training Starts During Onboarding and Never Stops

How do ethical leaders get their people to operate with honesty and integrity every step of the way? The answer lies in consistent training that starts at onboarding and never stops throughout the employee lifecycle. 

For these leaders, ethics training goes beyond a “compliance formality.” Ethical leaders pay a high degree of attention to an ethics training system because they’re fully aware of how it directly impacts their organization’s culture. 

By investing in ethics training that is focused on helping employees retain their learnings, ethical leaders make it extremely easy for their people to do the right thing every time. 

Ethics Start from Top Down, Not Bottom Up 

Great leaders don’t shy away from modeling the behavior they expect from their people. They consistently set examples of ethical behavior for their teams to follow. By being honest, maintaining transparency, and encouraging open communication, these leaders inspire trust and positivity in the workplace.

They establish clear standards, guidelines, and expectations for ethical conduct. They hold regular conversations surrounding ethical best practices and always guide their teams. Ethical leaders believe in the power of rewarding good behavior. They don’t miss the chances of publicly acknowledging people who choose right over wrong. 

Finally, ethical leaders aren’t afraid of feedback. In fact, they look for it by actively listening to their people. They create a culture where everyone feels comfortable to raise their concerns and find the resolutions they’re looking for.

From Patagonia Founder Yvon Chouinard’s commitment to sustainability to Indra Nooyi’s ethics, diversity, and inclusivity first approach – ethical leaders teach us that power can be used not only to drive organization-wide success but also to make the world a better place. 

By leading with integrity and ethics, leaders create an environment where employees feel excited to come to work. A culture of trust, integrity, and honesty not only creates happy employees and customers but also drives sustainable success and inspires the next generation of leaders.