What Is Ethical Leadership?

Ethical leadership involves using moral standards to make decisions that promote the greater good. Here are some key traits of ethical leaders, steps to become an ethical leader and tips for promoting ethical leadership on a company-wide level.

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UPDATED BY
Matthew Urwin | Jan 31, 2025

What would you do if you knew a talented candidate would accept your job offer for a salary far below the compensation range for the position? Hazim Macky, vice president of engineering at Coinme, a digital cryptocurrency exchange based in Seattle, faced this exact situation when offering an engineering role to a candidate who shared her salary expectations during the interview process.

“We have an opportunity here, right? We can pay less and still get her,” Macky said. “I took a step back and went back to these principles: I want to hire with integrity. I want to be respectful of candidates, with all the candidates. I want to be just in how we compensate within our range.”

Ethical Leadership

Ethical leadership is a leadership style grounded in principles like trust, equality and fairness that ultimately promotes the common good of an entity and the success of others.

Macky advised his recruiting team to remind the candidate of the compensation range and offer her a higher salary that would be within the range. Such situations call on Macky to apply his values in ethical leadership, which he identifies as integrity, respect, justice and honesty.

“It’s not just a characteristic or an expected behavior, in my opinion, from leaders or from managers. Here, leadership is a responsibility and a duty on everyone,” Macky said. “It’s when everyone in an organization or in a company ... behaves and acts in a way that is for the common good, for the best of the culture of the organization.”

 

What Is Ethical Leadership?

Ethical leadership involves managers and leaders using core values to guide their decision-making. They make sure their decisions align with what they believe is right, even if it doesn’t benefit themselves or their business. As a result, ethical leaders are more concerned with contributing to the greater good, prioritizing the well-being of those both within and outside the organization instead of chasing profits and personal gains.    

In turn, ethical leaders expect those around them to uphold similar values and convictions. This can create a healthy company culture where employees practice and receive respect, transparency and fairness, among other principles.  

 

Key Characteristics of Ethical Leaders

Every person brings their own unique personality and experiences into a leadership position. But there are some common traits that distinguish ethical leaders from typical leaders. 

Committed to Living Their Values

Think of ethical leadership as a practice, like yoga, said Ann Skeet, senior director of leadership ethics at the Markkula Center for Applied Ethics at Santa Clara University. It is something you strive to do consistently over time and build muscles to improve your skills.

“Ethics is about the things that help humans to flourish,” Skeet said. “The most helpful frame is a very positive one, where you’re really thinking about what you can do to help other people to really thrive.”

Mindful of Self-Awareness

A key principle of being an ethical leader is knowing yourself — even if that means learning your self-awareness is lacking. 

“If you’re not good at knowing yourself, get other people around you who can give you open and honest feedback,” Skeet said. “Being able to modulate and adjust based on what’s going on with you is really critical.”

Focused on the Good of Others

Ethical leaders embody traits that support the success of others and the greater organization like the characteristics Macky identified: integrity, respect, justice and honesty. Transparency is a value that Chris Rothstein promotes as CEO of Groove (now part of Clari), a sales engagement platform for enterprises using Salesforce.

“We should always be insanely transparent about who we are and who we’re not, so people can opt in. I think that’s important because I think there’s too many companies that are overselling in interviewing,” Rothstein said. “It leads to situations where employees are not necessarily signing up for what is real.”

Guided by Moral Standards

Niamh Parker, co-founder and chief legal and people officer at Altada — an artificial intelligence data compliance startup —  stresses the importance of personal responsibility and having a strong moral compass during the company’s hiring process. 

“Ethical leadership for me is making sure, number one, that the person is in the right role ... that their goals and their mission is in line with the company,” said Parker. “If they’re empowered, and they feel that they’re making a difference, then they’re going to give a lot more towards the company vision.”

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How Do You Become an Ethical Leader?

No one is born an ethical leader — it’s something that is learned over time. These steps can help any aspiring ethical leader weather the challenges and uncertainties along the way.   

1. Determine a Set of Values to Follow 

Decide what values matter most to you. Whether it be honesty, fairness or other principles, make these your company’s core values. They can provide much-needed clarity under various circumstances when you need to make pressing decisions.  

2. Surround Yourself With People Who Share Your Values

One person alone cannot create a culture. Communicate your values during the recruiting process, and only select new hires who believe in those same values. Otherwise, it’ll be hard to get buy-in from employees who don’t agree with your company’s principles or mission.   

3. Put Your Values Into Practice 

Lead by example. For instance, a leader who promotes fairness should treat employees equally and actively root out personal biases. Failing to practice your own values will likely cost you your employees’ trust and motivation.

4. Maintain Open and Honest Communication

Be straightforward when speaking with others. A leader who always paints a rosy picture may come off as insincere or unrealistic. Although sharing hard news or constructive criticism can be difficult, employees will likely appreciate being kept in the loop. 

5. Seek Feedback From Your Employees

Honest communication is most effective when it goes both ways. Encourage your employees to share their thoughts and feedback as well. Regularly asking for feedback can foster a culture of collaboration and accountability. 

6. Embrace Continuous Learning

Admit when you make mistakes. Rather than this being a weakness, employees will likely value your honesty and be more welcoming when you offer feedback of your own. Consider finding a mentor who you can turn to for tips and advice as well.   

7. Apply Empathy Toward Yourself 

Model desirable behaviors for others by showing yourself grace and kindness. When leaders take time to care for themselves, it’s much more effective at removing any stigma around self-care and encouraging employees to practice empathy in their own lives. 

8. Build a Program for Ethical Leadership

Consider officially integrating ethical leadership into company operations once it’s become regular practice on an individual level. While this next step can take on many forms, center your values during the process and elicit feedback to ensure the strategy is designed collectively.  

 

How Do You Bring Ethical Leadership to Your Organization?

Developing ethical leadership on a broader level takes plenty of planning, but following these guidelines can make the process smoother for managers and employees alike. 

Create Spaces for Storytelling

Ethical leadership requires investment in empathetic relationships and consciousness about the community you are building. That’s best done through storytelling, Skeet said. For a large company, this might look like sharing a personal story relating to ethical values at a town hall meeting, while at a startup, conversations around company ethics can usually start at the beginning and take place in smaller group meetings.

Encourage Feedback to Hold Leaders Accountable

At Groove, Rothstein encourages employees to ask tough questions to hold leadership accountable. Employees can submit questions through an anonymous form before every all-hands meeting, and the leadership team insists on answering every question during the meeting. 

“At times, our leadership team hasn’t done a good enough job on something ... employees will see this and they feel comfortable enough to write in,” Rothstein said. “We’ve had to basically address the issue at the whole company and let them know, just like everyone else, sometimes we’re not as good as we should be.”

Establish a Procedure for Making Ethical Decisions

In addition to developing communication around ethical leadership, Skeet recommends creating a template to use for ethical decision-making, along with writing out values for the company.

“Some organizations have mission statements or value statements, belief statements, principles. It doesn’t really matter what it is,” Skeet said. “What’s important about it is that it’s the one that gets used. It’s the one that people refer back to.”

But just writing a mission statement is not enough. There must be implementation of these values. This can include putting people on committees or doing job rotations to allow employees to understand the different ethical considerations throughout the company, Skeet added. 

Tailor an Ethical Leadership Plan to the Needs of the Business

Prior to joining Coinme, Macky worked at a larger startup, Remitly, and established tech companies like Microsoft and Amazon. Implementing ethical leadership at larger companies compared to a startup environment can look quite different.

“Usually in big corporations ... there are more governance bodies, processes and entities within the organization to ensure that ethical leadership is demonstrated and put in place, including training, including audits,” Macky said. “Some bigger corporations have salary reviews on an ongoing basis, even as extended offers by super independent parties.”

He continues: “In smaller startups, there is a little bit of governance, but it falls on the individual to be their self-governing entity, which is a great thing but sometimes challenging ... is it a common language that everybody at the organization is speaking?”

 

How Do You Remain Accountable as an Ethical Leader?

There must be organizational and personal introspection to assess your ethical leadership abilities. This can be evaluating your past, present and future state.

“You’re doing all the time, but do you stop at some point and reflect?” Skeet said. “The three activities here are looking at your history, assessing your current state and then looking forward and acknowledging future risks and uncertainty.”

At Altada, Parker said the company has a flat structure where the junior data scientists to the executive assistants to the managers all have access to the C-suite, and all team members are consistently challenging each other and evaluating the company’s values.

“If you don’t listen to your people, you’ll never get there, in my view,” Parker said. “There’s a lot of listening — it’s like a two ears, one mouth kind of scenario.”

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What Does Ethical Leadership Look Like to Your Customers?

Ethical leadership also extends to your customer relationships. Below are a couple examples of what this looks like in practice.

Taking Ownership of a Poor Customer Fit

When a potential client is not the right fit for Groove’s platform, Rothstein is not afraid to refer the companies to competitors. And if the team gets something wrong like taking on a client that is a poor fit with the company’s purpose, Rothstein is willing to cut ties. 

For example, Groove worked with a company that wanted to use the platform to blast email people every day. 

“This is something we’re not really for, supporting some sales rep sending 10,000 emails a day.... They kept pushing us to add new features that would allow that, and I just had to explain to them, it’s just not a fit,” Rothstein said. “That’s ultimately our fault in the sales process. We should have probably understood that and what their true desire was.”

Rothstein ended up refunding the client, even though the company legally did not have to issue a refund. Being willing to take ownership is a value that has been a part of Groove’s company culture since the beginning, he said. 

“So many companies say they’re customer-centric, but whenever they have to make a tough decision like refunding someone or cancelling an agreement or whatever it may be, they always choose the more selfish short term thing for them,” he said. “The first value we ever created is called ‘care more’ ... do the right thing in many situations, and this is both for our employees [and] for our customers.”

Refusing a Request to Preserve the Company’s Values

Working with personal data as an operational AI platform, Altada upholds strict ethical standards for managing information.

“You need to really look at the people behind the information and the data,” Parker said. “It’s always really important to us ... that the data subjects are always protected in the use of the data and also that there wouldn’t be any misuse of data on what a client would like us to do with that data.”

Parker and her team faced such a situation when a client asked the company to remove data in relation to Altada’s sentiment analysis algorithm around purchasing in specific areas. 

“We had somebody ask us if it was possible to remove the crime data for a certain zip code in the U.S.,” she said. “We were unwilling to do that for a client because we said that it would be unfair to the purchaser in that area if we didn’t allow client sentiment to be included in the analysis.”

Parker tried to explain alternative ways for the client to frame the data but explained that the team’s algorithm was incorruptible. Ultimately, she said the team quickly came to the decision together that working with the client would be in opposition to the company’s ethical leadership values and found it easy to pass on the opportunity to work with the company.

Frequently Asked Questions

A real-life example of ethical leadership is Johnson & Johnson’s response to a Tylenol tampering incident in 1982. After Tylenol bottles at Chicago pharmacies were found to be contaminated with cyanide, Johnson & Johnson quickly recalled 31 million bottles and faced major financial losses. But the company prioritized public safety and developed anti-tampering measures, regaining the public’s trust by the time it re-released the medication.

Ethics refers to moral standards that guide a person to do what’s best for the common good, not just themselves. A leader who follows ethical principles can earn the trust and respect of their employees, leading to more buy-in and a healthier company culture.

While managers and leaders can tailor ethical leadership according to their company’s needs, common traits exhibited by ethical leaders include:

  • Fairness
  • Honesty
  • Integrity
  • Transparency
  • Respect
  • Openness
  • Accountability

Effective leaders emphasize accomplishing goals in the most efficient way possible. Meanwhile, ethical leaders make sure decisions align with their moral standards — even at the expense of company goals and profits. That said, ethical and effective leadership go hand-in-hand. A leader who is respectful, honest and accountable will likely find it easier to win over employees, contributing to a productive and collaborative workplace.

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