Ethical leadership is the secret to attracting Gen Z talent

In a world where more and more leaders chase profit over purpose, the concept of ethical leadership has never been more pivotal, writes Kerry Kingham.

While financial performance is a vital aspect of business success, it is troubling to see how often it can eclipse genuine leadership qualities. This shift in priorities is particularly disconcerting for Gen Z – a generation that values transparency, integrity, and societal impact in both their personal and professional lives.

To create more positive and trustworthy workplaces that truly resonate with Gen Z and pave the way for improved company and community outcomes, organisations need to adopt ethical leadership, taking it upon themselves to steer their teams with an unwavering commitment to moral values and principles.

What is ethical leadership?

Before we explore the link between Gen Z and ethicality – it’s important to understand what ethical leadership is. Put simply, it’s the practice of upholding honest, value-driven leadership. Ethical leaders exemplify:

• Integrity: Adhering consistently to moral and ethical principles, even when faced with challenges or unpopular decisions.
• Empathy: Understanding and considering others’ perspectives and feelings.
• Accountability: Taking responsibility for actions and decisions and holding oneself and their team accountable.
• Courage: Possessing the bravery to stand up for what is right, even in the face of adversity or opposition.
• Vision: Having a clear vision of ethical goals and inspiring others to achieve them through ethical means.

An ethical leader demonstrates these qualities in both their personal and professional actions. They prioritise the wellbeing of their team, stakeholders, and society at large, ensuring their decisions and actions align with ethical standards and values.

Remaining true to these qualities can be challenging as a senior leader, especially when conflicting stakeholders, decisions and outcomes need to be balanced. Ethical leadership is all about doing the right thing, even when no one is watching.

Why is ethics important in leadership?

In today’s workplaces, where reputation is more transparent than ever, a commitment to ethical leadership is a key success lever, which can set a business apart from its competitors and provide security for investors or stakeholders. Ethics in leadership helps to enhance:

• Trust building: Trust is fundamental to any successful relationship, and ethical leadership can build this trust among team members, stakeholders, and the wider community.
• Reputation: Organisations led by ethical leaders tend to have better reputations. This can attract talent, customers, and investors, contributing to long-term success.
• Sustainability: Ethical decisions often lead to sustainable practices that benefit the organisation and society in the long run.
• Conflict resolution: Ethical leaders are better equipped to handle conflicts fairly and constructively, ensuring a harmonious work environment.
• Legal compliance: Adhering to ethical principles aids in compliance with laws and regulations, reducing the risk of legal issues.

Why is ethical leadership more important than ever?

Apart from the more obvious value of doing right by our people and being mindful of our processes, ethical leadership can serve as a strategic asset in cultivating a workplace culture that resonates with the emerging generation.

Many employees who will form future growth and leadership within organisations are part of Gen Z. This generation, perhaps more than any other, is fuelled by purpose. Born in 1997 and later, they have grown up in the shadow of global upheaval. Having experienced a global pandemic, economic recessions, and major cultural shifts during formative periods in their lives, they see the world differently, from pandemics to economic downturns.

Gen Z are passionate about solving societal problems, and they expect the places they work to share these drives and beliefs. In fact, an Ernst & Young survey from 2021 revealed that nearly two-thirds of Gen Z professionals feel it is “very or extremely important” to work for employers that share their values, as their work life is defined by value, not money.

The 5 pillars of ethical leadership

• Respect for others: Ethical leaders show respect for all individuals, valuing their contributions and treating them with dignity. This principle fosters a culture of mutual respect and collaboration.
• Service to others: Emphasising the leader’s role as a servant to their followers, this principle focuses on the needs and development of team members. Ethical leaders prioritise the greater good over personal gain.
• Justice and fairness: Ethical leaders strive to ensure fairness and justice in their decisions and actions. They are committed to equity, providing equal opportunities, and making unbiased decisions.
• Honesty and transparency: Being honest and transparent is crucial for building trust. Ethical leaders communicate openly, admit mistakes, and share information truthfully, fostering a culture of trust and accountability.
• Community building: Ethical leaders endeavour to build a sense of community within their organisation. They encourage collaboration, foster strong relationships, and create an inclusive environment where everyone feels valued.

Case study: The consequences of unethical leadership

Consider an e-commerce start-up in the disability sector, which aims to provide accessible and affordable products for individuals with disabilities. Suppose the CEO, driven by profit maximisation and pressure from shareholders, decides to cut costs by sourcing low-quality products and inflating prices while misleading customers about the quality and origin of the products.

Initially, financial results might seem promising, but the long-term repercussions can be devastating. Here’s how a lack of ethical leadership in this scenario can cause reputational and brand damage:

• Loss of trust: Customers with disabilities and their families rely heavily on these products. Discovering the products are subpar or misrepresented breaks the trust they placed in the brand, leading to negative reviews and damaging word of mouth, especially in niche markets.
• Negative publicity: Media and advocacy groups for individuals with disabilities may highlight the unethical practices, causing a public relations crisis. The negative publicity can overshadow any previous positive contributions of the start-up.
• Employee morale and turnover: Employees inspired by the start-up’s mission might feel betrayed by the CEO’s actions, leading to decreased morale, reduced productivity, and higher turnover rates. Talented individuals may leave, and attracting new talent may become challenging.
• Legal consequences: Misleading customers and compromising on product quality can result in legal action. Lawsuits and fines can place further strain on the company’s finances and tarnish its reputation.
• Stakeholder confidence: Investors and partners who value ethical business practices may withdraw their support. This can lead to financial instability and hinder company growth and innovation.

Leading with conscience

As evidenced in the case study, a lack of ethical leadership is not only a sign of a wavering moral compass, but it can also result in significant damage to your organisation and reduce your ability to attract emerging talent.

With Gen Z leading the charge on increasingly ethical workplaces and practices, ethical leadership is now the cornerstone of thriving organisations. By prioritising integrity in their leadership, organisations can create a positive impact that resonates far beyond their immediate circle of influence, guiding organisations toward success while driving meaningful societal change.

Kerry Kingham is the chief executive of The Chooze Shop.