Ethical leadership is the practice of making decisions guided by values such as honesty, respect, accountability, justice, and service. For organizations, it can help build trust, strengthen workplace culture, and support long-term success.
Strong ethical leadership is not only about how one leader responds in a difficult moment. It is also about creating an environment where people understand how to act on shared values in their day-to-day work.
Drawing on insights from Harvard DCE Professional & Executive Development, this article explores what ethical leadership means, why it matters, and how leaders can put ethical principles into practice.
Why Is Ethical Leadership Important?
Ethical leadership is important because it helps organizations build trust, reduce risk, and create workplace cultures where employees feel respected and supported.
Leaders who make ethical decisions can strengthen an organization’s reputation, improve employee engagement, and support more consistent decision-making across teams. Ethical leadership also helps organizations navigate difficult situations where the right choice may not always be the easiest or most profitable one.
In business settings, ethical leadership can also help align day-to-day decisions with the values an organization wants to uphold.
The 6 Main Principles of Ethical Leadership
The principles of ethical leadership provide a framework for how leaders make decisions, communicate with others, and build trust within an organization. Together, they help translate values into everyday workplace behavior.
1. Respect
Respect includes valuing others’ skills and contributions. While historically respect in the workplace may have been one-way (leaders demanding respect from employees), in an ethical work environment, respect is mutual.
Mutual respect leads to healthier workplace relationships where both sides appreciate and support what the other is doing and feel secure in talking through issues and challenges. Healthy relationships create positive work environments, which drives increased productivity.
Current and upcoming business leaders should take mutual respect into account as workforce expectations continue to shift.
“I tell current leadership to respect Gen Z. They have values and morals, and you’re going to have a better organization because of them,” McCarthy said. “They aren’t going to put up with the old hierarchy that doesn’t offer mutual respect.”
2. Accountability
Ethical leaders hold themselves accountable for their actions. They make decisions based on integrity and stand behind their work. They also lead by example, communicate openly about challenges, and don’t look to place blame on others for any shortfalls.
3. Service
Leaders make ethical decisions based on doing what is right for employees, customers, and the community. Because these constituents are always top of mind for ethical leaders, they often have a strong sense of service. They engage in activities such as charitable giving and volunteer work to give back to their communities — and encourage their teams to do the same.
4. Honesty
Leaders who are transparent build trust amongst their organizations and amongst customers.
To build and maintain trust, leaders must be good communicators who speak openly and honestly about issues. Regardless of the issue’s severity or unpopularity, leaders’ responsibility to be clear and candid empowers others to make the right decisions with the information they have.
Honesty and transparency also help to build a brand’s reputation, leading to long-term customer loyalty.
5. Justice
Justice is not just about following the law, but about ensuring that everyone is getting what they deserve. Ethical leaders approach situations with a focus on treating everyone fairly, and they expect their teams to treat each other and customers the same way. Through their actions, they build equitable work environments where everyone feels respected.
6. Community
Ethical leaders view their companies as communities and consider everyone involved when evaluating situations and making decisions. By viewing their organizations this way, they build equity and inclusion into their decision-making process and create work environments that encourage collaboration across teams.
Ethical Leadership Examples in Business: Positive and Negative Outcomes
Real-world business examples can help show how ethical leadership affects trust, reputation, and organizational outcomes. The following examples illustrate how different leadership decisions and workplace cultures can shape public perception, customer confidence, and long-term performance.
Johnson & Johnson
One of the most famous examples of ethical leadership was the case of the Tylenol cyanide poisonings in the early 1980s. Seven people died of cyanide poisoning, and the only connecting factor was that they had all taken extra-strength Tylenol. During investigation, it was discovered that the tablets were laced with cyanide.
Johnson & Johnson’s leaders acted quickly and pulled all Tylenol products off the shelves — 31 million bottles, worth over $100 million — and stopped all production and advertising. The swiftness of their decision, although costly, put customers’ well-being first and saved lives.
They partnered with law enforcement to find the perpetrator and subsequently developed the first-ever tamper-resistant packaging. They were transparent with the public about what they were doing to ensure this tragedy never happened again.
The Tylenol brand recovered from the incident, largely because of Johnson & Johnson’s ethical leadership team’s swift action and transparent care for customers.
By acting quickly and communicating transparently, Johnson & Johnson helped preserve customer trust during a serious public health crisis.
JetBlue
In 2008, JetBlue left passengers stranded on the tarmac at the John F. Kennedy International Airport for more than five hours during a snowstorm. The delay had a ripple effect — JetBlue had to cancel more than 1,000 flights over the following five days.
In response, JetBlue’s CEO wrote a letter of apology to customers. He also directed his team to draft a customer bill of rights, which outlined customers’ rights to information about flights and information about compensation in the event of delays or cancellations.
The CEO also participated in a public apology tour, taking full responsibility for the incident rather than blaming it on the weather.
His transparency and accountability created trust with customers, who stayed loyal to the airline.
JetBlue’s response reinforced the value of accountability, clear communication, and customer-centered decision-making after a significant service failure.
Wells Fargo
In September 2016, it was revealed that employees of Wells Fargo, one of the largest banks in the United States, opened millions of unauthorized accounts in order to meet aggressive sales targets.
This widespread fraudulent activity was the result of a work culture that prioritized quantity over quality and pushed employees to engage in unethical practices.
Company leaders denied knowledge of fraudulent practices. The bank was hit with significant financial penalties, but because of the lack of accountability, they damaged the trust of their customers and investors. They reported a 50 percent profit loss in the quarter following the scandal.
The Wells Fargo scandal illustrates how a culture that prioritizes short-term results over ethical behavior can damage trust, reputation, and long-term performance.
How Leaders Can Build Ethical Decision-Making Skills
Ethical leadership skills are developed over time through reflection, practice, and experience. Leaders can strengthen these skills by learning how to navigate competing priorities, communicate transparently, and make decisions that consider both organizational goals and human impact.
They can also learn how to create environments where employees understand how to apply shared values in daily decisions.
Those who practice ethical leadership have positive corporate cultures where employees are engaged, motivated, and feel good about coming to work. Companies without ethical leadership face lower productivity and high turnover rates, impacting the organization’s bottom line.
Ethical leaders aren’t just born with these skills — they develop them over years of experience and training.
Harvard DCE Professional & Executive Development offers a two-day Ethical Leadership program that helps leaders develop skills to make ethical choices and lead companies through challenging dilemmas.
Topics covered include:
- Making ethical decisions with conflicting responsibilities
- Building a moral framework within yourself and the organization
- Understanding the role of employees in both their professional and personal lives
- Navigating a slippery slope when seemingly good people do bad things
- Building a corporate culture that values moral behavior
Learn more about the ethical leadership program, including how to register.
Leaders looking to expand their ethical leadership skills should also consider the two-day Authentic Leadership program, where they will learn how to develop mindfulness and authenticity to build trust, create engagement, and promote productivity.
