ABSTRACT Evidence is presented to support that organizational performance can be enhanced through ethical leadership. An ethical corporate culture has been associated with trust, commitment to quality, customer satisfaction, employee commitment, and financial performance. There is an opportunity for managers to take a proactive approach to incorporating ethical concerns into strategic planning. In addition, there has been public policy support for top management to be responsible for organizational ethics. Academic researchers can assist by investigating the relationship between ethical leadership and organizational performance variables. The Role of Ethical Leadership in Organizational Performance
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These models have been examined and empirically tested to confirm that organizational ethical climate has a significant impact on individual and work group ethical decisions (Jones 1991). Leadership provides the process of influencing individuals and groups in an organization to achieve a goal--such as an ethical workplace. Ethical leadership often comes from top managers who occupy a formal position of legitimate power and from informal interpersonal relationships and personal characteristics. Many corporations have leaders who combine both formal and informal value based leadership to shape the reputation of their organization.
Corporations featured in Fortune’s annual issue examining the most admired companies have, in common, very dynamic and strong leaders or leadership heritages that affect the firm’s reputation. General Electric has been acknowledged as a firm with excellent leadership because of the insights of CEO, Jack Welch. GE spends over $800 million a year on training and leadership development (about half of what it invests in research and development)(Stewart, Harrington, and Griffin Sol 1998). On the other hand, there have been ethical scandals at GE possibly evolving from a relentless drive for profits (Boyle, 1999). General Electric CEO, Jack Welch has earned the nickname ANeutron Jack@--the bomb that destroys people, but leaves buildings intact. Bill Gates as founder and CEO of Microsoft has garnered much