The arrival of the new millennium brought with it a tsunami of corporate scandals. Just as the publicity from one wave of discredited companies (Enron, WorldCom, Tyco, Adelphia) subsided, another wave rose to take its place (Health South, Strong Mutual Funds). All of these cases of moral failure serve as vivid reminders of the importance of ethical leadership. In every instance, leaders engaged in immoral behavior and encouraged their followers to do the same.
There are two components to ethical leadership. First, leaders behave morally as they carry out their roles. Second, they shape the ethical contexts of their groups and organizations. These dual responsibilities intertwine (the leader's behavior acts as a model for the rest of the organization), but examining each one separately provides a more complete picture of the task facing leadership practitioners.
The nature of the leadership role imposes a particular set of ethical responsibilities (Badararacco 2001, p.34).
As compared to followers, leaders are more powerful, enjoy greater privileges, are privy to more information, have wider spans of authority or responsibility, deal with a broader range of constituencies who demand consistent treatment, and balance a wider variety of loyalties when making decisions (Johnson 2005). Because leaders exert widespread influence, how they respond to the ethical demands of their roles has an immediate impact on followers, for good or ill. Educator Parker Palmer argues that the difference between moral and immoral leadership can be as dramatic as the contrast between light and darkness. He describes a leader as "a person who has an unusual degree of power to create the conditions under which other people must live and move and have their being, conditions that can either be as illuminating as heaven or as shadowy as hell." (Palmer 1996, p.197-208).
On the other hand, Kellerman classifies bad...