The five major characteristics of ethical problems are: 1.

Most ethical decisions have extended consequencesManagerial decisions, actions and

results have consequences that extend beyond their control and beyond the organization into society. For example, bribes change governmental processes. Pollution affects environmental health. All the consequences and effects should be considered before decisions are made.

2.

Most ethical decisions have multiple alternativesSimple yes or no choices do not

adequately characterize the many alternatives that exist and that should be considered for decisions such as Should a manager pay a bribe? and Should a factory pollute the air?

3.

Most ethical decisions have mixed outcomesAs noted in the second point for
alternatives, outcomes are not unambiguous; they have social benefits and costs as well as financial revenues and expenses associated with the ethical choices.

4. 5.

Most ethical decisions have uncertain consequencesUnanticipated and unknown

consequences can follow ethical choices.

Most ethical decisions have personal implicationsSuch decisions can affect the lives
and careers of the decision makers. Individual costs and benefits, in addition to financial and social ones, are associated with most alternatives in ethical decisions.

Ethical behavior Definition Acting in ways consistent with what society and individuals typically think are good values. Ethical behavior tends to be good for business and involves demonstrating respect for key moral principles that include honesty, fairness, equality, dignity, diversity and individual rights. Importance Business ethics are easily overlooked by the potential entrepreneurs because they often have other priorities, such as business ideas, marketing, and financial matters, to consider. However, business ethics have a more powerful influence on the existence of a business operation than most people think. They can create a positive image of a business that boosts the growth and sales by increasing consumer trust. On the other hand, breaching business ethics could create serious damage, causing customers turn their backs on a business. Ethical people are those who recognize the difference between right and wrong and consistently strive to set an example of good conduct. In a business setting, being ethical means applying principles of honesty and fairness to relationships with coworkers and customers. Ethical individuals make an effort to treat everyone with whom they come in contact as they would want to be treated themselves. Build Customer Loyalty

Consumers may let a company take advantage of them once, but if they believe they have been treated unfairly, such as by being overcharged, they will not be repeat customers. Having a loyal customer base is one of the keys to long-range business success because serving an existing customer doesnt involve marketing cost, as does acquiring a new one. A companys reputation for ethical behavior can help it create a more positive image in the marketplace, which can bring in new customers through word-of-mouth referrals. Conversely, a reputation for unethical dealings hurts the companys chances to obtain new customers, particularly in this age of social networking when dissatisfied customers can quickly disseminate information about the negative experience they had. Retain Good Employees Talented individuals at all levels of an organization want to be compensated fairly for their work and dedication. They want career advancement within the organization to be based on the quality of the work they do and not on favoritism. They want to be part of a company whose management team tells them the truth about what is going on, such as when layoffs or reorganizations are being contemplated. Companies who are fair and open in their dealings with employees have a better chance of retaining the most talented people. Employees who do not believe the compensation methodology is fair are often not as dedicated to their jobs as they could be. Positive Work Environment Employees have a responsibility to be ethical from the moment they have their first job interview. They must be honest about their capabilities and experience. Ethical employees are perceived as team players rather than as individuals just out for themselves. They develop positive relationships with coworkers. Their supervisors trust them with confidential information and they are often given more autonomy as a result. Employees who are caught in lies by their supervisors damage their chances of advancement within the organization and may risk being fired. An extreme case of poor ethics is employee theft. In some industries, this can cost the business a significant amount of money, such as restaurants whose employees steal food from the storage locker or freezer. Avoid Legal Problems At times, a companys management may be tempted to cut corners in pursuit of profit, such as not fully complying with environmental regulations or labor laws, ignoring worker safety hazards or using substandard materials in their products. The penalties for being caught can be severe, including legal fees and fines or sanctions by governmental agencies. The resulting negative publicity can cause long-range damage to the companys reputation that is even more costly than the legal fees or fines. Companies that maintain the highest ethical standards take the time to train every member of the organization about the conduct that is expected of them. Reasons for unethical behavior: Many people behave unethically for the following reasons:

Greed One of the main causes of unethical behavior is greed. A person often chooses to act immorally or unethically for personal financial gain. In business, there are a number of opportunities for employees and employers to do the wrong thing. For example, an employee who has contact with a client may be willing to give them a discount in exchange for a kickback. An employer may have an opportunity to sell the company's stock when he has inside information about a drop in profit. Environment Sometimes, a person acts unethically in business because his employer condones the behavior. For example, in the late 1990s, traders at Enron conducted trades that cost the state of California millions of dollars in electricity payments. This was unethical, but the behavior was so common on the trading floor that it was never questioned. Career Advancement A person acts unethically because she believes it helps her career. An unethical act is used as a means of impressing a superior or hurting the career of a competitor. For example, a person sabotages a co-worker's project as a means of making herself look better in comparison. Ignorance Ethical conflicts or violations are not always transparent, and it's easy for an employee to perform an unethical act without knowing it. For this reason, it is important for companies to make employees aware both of the company's general ethics policy, and specific examples of ethical and unethical behavior.

What is Leadership Leadership is a process by which an executive can direct, guide and influence the behavior and work of others towards accomplishment of specific goals in a given situation. Leadership is the ability of a manager to induce the subordinates to work with confidence and zeal.

Leadership is the potential to influence behaviour of others. It is also defined as the capacity to influence a group towards the realization of a goal. Leaders are required to develop future visions, and to motivate the organizational members to want to achieve the visions. According to Keith Davis, Leadership is the ability to persuade others to seek defined objectives enthusiastically. It is the human factor which binds a group together and motivates it towards goals. Characteristics of Leadership 1. It is a inter-personal process in which a manager is into influencing and guiding workers towards attainment of goals. 2. It denotes a few qualities to be present in a person which includes intelligence, maturity and personality. 3. It is a group process. It involves two or more people interacting with each other. 4. A leader is involved in shaping and moulding the behaviour of the group towards accomplishment of organizational goals. 5. Leadership is situation bound. There is no best style of leadership. It all depends upon tackling with the situations. 1. Required at all levels- Leadership is a function which is important at all levels of management. In the top level, it is important for getting co-operation in formulation of plans and policies. In the middle and lower level, it is required for interpretation and execution of plans and programmes framed by the top management. Leadership can be exercised through guidance and counseling of the subordinates at the time of execution of plans. 2. Representative of the organization- A leader, i.e., a manager is said to be the representative of the enterprise. He has to represent the concern at seminars, conferences, general meetings, etc. His role is to communicate the rationale of the enterprise to outside public. He is also representative of the own department which he leads. 3. Integrates and reconciles the personal goals with organizational goals- A leader through leadership traits helps in reconciling/ integrating the personal goals of the employees with the organizational goals. He is trying to co-ordinate the efforts of people towards a common purpose and thereby achieves objectives. This can be done only if he can influence and get willing co-operation and urge to accomplish the objectives. 4. He solicits support- A leader is a manager and besides that he is a person who entertains and invites support and co- operation of subordinates. This he can do by his personality, intelligence, maturity and experience which can provide him positive result. In this regard, a leader has to invite suggestions and if possible implement them into plans and programmes of enterprise. This way, he can solicit full support of employees which results in willingness to work and thereby effectiveness in running of a concern.

5. As a friend, philosopher and guide- A leader must possess the three dimensional traits in him. He can be a friend by sharing the feelings, opinions and desires with the employees. He can be a philosopher by utilizing his intelligence and experience and thereby guiding the employees as and when time requires. He can be a guide by supervising and communicating the employees the plans and policies of top management and secure their co-operation to achieve the goals of a concern. At times he can also play the role of a counselor by counseling and a problem-solving approach. He can listen to the problems of the employees and try to solve them. Ethical theories on leadership talk about two main things: (a) The actions and behaviour of leaders; and (b) the personality and character of leaders. It is essential to note that Ethics are an essential to leadership. A leader drives and influences the subordinates / followers to achieve a common goal, be it in case of team work, organizational quest, or any project. It is an ethical job of the leader to treat his subordinates with respect as each of them has unique personality. The ethical environment in an organization is built and developed by a leader as they have an influential role in the organization and due to the fact that leaders have an influence in developing the organizational values. An effective and ethical leader has the following traits / characteristics: Dignity and respectfulness: He respects others. An ethical leader should not use his followers as a medium to achieve his personal goals. He should respect their feelings, decision and values. Respecting the followers implies listening effectively to them, being compassionate to them, as well as being liberal in hearing opposing viewpoints. In short, it implies treating the followers in a manner that authenticate their values and beliefs. Serving others: He serves others. An ethical leader should place his followers interests ahead of his interests. He should be humane. He must act in a manner that is always fruitful for his followers. Justice: He is fair and just. An ethical leader must treat all his followers equally. There should be no personal bias. Wherever some followers are treated differently, the ground for differential treatment should be fair, clear, and built on morality. Community building: He develops community. An ethical leader considers his own purpose as well as his followers purpose, while making efforts to achieve the goals suitable to both of them. He is considerate to the community interests. He does not overlook the followers intentions. He works harder for the community goals. Honesty: He is loyal and honest. Honesty is essential to be an ethical and effective leader. Honest leaders can be always relied upon and depended upon. They always earn respect of their followers. An honest leader presents the fact and circumstances truly and completely, no matter how critical and harmful the fact may be. He does not misrepresent any fact. It is essential to note that leadership is all about values, and it is impossible to be a leader if you lack the awareness and concern for your own personal values. Leadership has a moral and ethical aspect. These ethics define leadership. Leaders can use the above mentioned traits as yardsticks for influencing their own behaviour.