Corporate Governance Ethical Leadership Issues

Question :

Critically evaluate the ethical leadership issues raised in multinationalcorporation and any other ethical considerations in deciding about what to do in response to the issues in this case.

Answer :

Leaders with high value for ethics and integrity implement their core personal principles in their leadership styles. Ethical leadership inspires ethical behaviour within an organization. Ethical considerations work as an alignment of personal and professional values. In contrast to the positive influences of an ethical leader, failed or unethical leadership creates the situation of ethical dilemma gap (Kabeyi, 2018). When there are situations such as unfair treatment towards employees, breach of organizational policies through unethical customary practices, inconsistent leadership and organizational policies, employee bias or treatment of employees on grounds other than skills and merit. In the past decade many such leadership failures have been witnessed where frauds and scandals were the results of challenging unethical leadership. Maintaining ethics in leadership is specifically beneficial for leaders and the organization as a whole. Promotion of ethical culture drives collaborative behaviour which promotes the interests of the business while considering the needs of the employees as well (Emery, 2016). This report would look at the framework of ethical leadership, and the ethical issues that have emerged as a result of the individualist approach in the concerned case of the multinational company. The appropriate ethical responses would be discussed followed by a discussion on challenges and solutions in cross-cultural management.

This theory states that an individual (employee) can understand and adapt the actions of another individual (leader) through observation (Dr. Mohiuddin & Hossain, 2016). This depends on the perception of the leader as fair or unfair in the treatment of fellow workers. According to this theory, the leader’s actions and not words are considered as benchmark or reference which influences the behaviour of the employees. This indicates that while ethical leadership can encourage moral values in employees unethical or self-centred leaders can mislead employees into immoral behaviour. Such immoral behaviour could also be a result of retaliation against an unethical leader. 

An unethical leader is a weak moral manager and weak moral person, a hypocritical leader is a weak moral person and a strong moral manager, ethical leader is a strong moral manager and strong moral person whereas an ethically neutral leader can be either a weak or strong moral person but a weak moral manager. With the help of this matrix it can be understood that an unethical leader is a person with ulterior personal motives and is disrespectful and condescending towards the subordinates. Hypocritical leader, as the name suggests, uses the ethical consideration as part of reputation building lectures but does not implement such practices in real life. An ethically neutral leader is hard to decipher and controversial (Trevino, et al., 2000). This kind of leader is debated as someone who presents an image of a person with ethical or unethical stands that cannot be understood with clarity. However, on moral grounds this leader has minimal compassion and eagerness to understand others and is mostly self-centered. It also refers to a leader who is not open to constructive criticisms. 

Ethical considerations arise in whistleblowing when whistle-blowers choose loyalty to survive in a bureaucratic company. A stringent work environment can affect the moral commitment and motivation of the person and they might be forced to change their decision as their motivation to report withers (Malik & Nawaz, 2018). However, if they are confident about their findings and evidences they should not hesitate to publish information. Even from the corporate perspective whistleblowing is not considered unethical. Some organizations do have whistleblowing hotlines which should be appropriately used. Two kinds of extreme concerns can arise from these hotlines, either too many reports or too less or no reports. In case of too many reports the credibility of the facts should be stringently evaluated and prompt actions should be taken. However, the lack of reports does not ensure ethical practices, it could also mean that the whistle-blowers are facing moral conflicts. Whistleblowing can be considered unethical when the intentions are not to restore moral grounds but to carry out breach of privacy (Cheng, et al., 2019). 

The second reason behind this gap is the mentality of different people. People coming from diverse backgrounds have different perceptions and thought processes which create the barriers to communication. This is a common issue in a multinational company not only across borders but also within a country which has diverse cultures. In the era of global business, any employee can be recruited and transferred to any part of the world which leads to communication issues. Such gaps are majorly seen between superiors and subordinates and it leads to poor performance and stress when the two parties cannot fully comprehend each other. 

Cross-cultural management can often lack dynamism. Culture is a shared concept. It means that employees and supervisors can learn from and adapt to each other's culture. Dynamism refers to the adaptability process where all workforce come together irrespective of hierarchy and seek to achieve a common organizational goal (Singh, 2008). However rigid management and stringent rules prevent such developments in an organisation. Work environments where sharing is not encouraged can lead to decreased productivity. Here, cultural shock also plays an important role as an employee relocates. Due to cultural sensitivity employees would restrict themselves from learning and growing together, especially when such dynamic behaviour is not encouraged. 

An employee's behaviour also depends on the cultural background. Cultural values can be quite different from each other. This is the reason why people easily connect with others from similar backgrounds. Although a multicultural workforce has to work towards the same organizational goals but due to their differences in perception of moral values they face a clash of interest. Difference in attitudes and behaviours often make it difficult to achieve rational decisions. Moreover there might be a lack of unity in the decision of some people (Ahmad, et al., 2017).

Besides the difference in culture among people from various nationalities there are regional cultural differences as well. The difference in this regard is generally in terms of religious and social customs. There could be different subcultures where certain festivals are celebrated and certain religious norms are followed. In a multinational company it is not possible to accommodate all types of religious or cultural holidays (Maity, 2018). It might become a significant problem in cross-culture management. It is necessary to find a balancing ground for the management of this problem and explain to the employees why some holidays are provided and some are not included. Employees who come from culturally rooted sensitive backgrounds might revolt against the management as they feel their values are not respected. This might lead to unethical behaviour.

Cultural habits and mannerisms are far too diversified which might interfere with corporate culture. Irrespective of a multi-cultural workspace, corporate etiquettes should be practiced at all times so that daily interactions do not come out as cultural bias. However, cultural gestures and mannerisms are deeply ingrained in people which they express unknowingly. This leads to misunderstandings which many employees find offensive (Singh, 2008). This is a crucial issue which managers have to deal with every day. 

Challenges can come from managers as well in a multi-cultural workspace. The most commonly observed challenge is the partiality or bias in the behaviour of the managers. Some managers have the tendency to favour those belonging to his or her own culture and community. This is a common occurrence where managers are blinded by cultural favouritism. It could also happen due to the fact that the manager personally detests any particular culture or religion. Pre-conceived notions about a culture also leads to such bias. Besides, cultural superiority might be another barrier. Some employees or even managers may feel that one’s own culture is superior to that of others. This issue is known as ethnocentrism (Maity, 2018). This influences the way one behaves with fellow workers. It also dictates the method of their work as they strive to prove that their methods are better and accurate than those of others.