Leadership

The problem to be investigated is how the gap of trust between leaders and followers, weakens employees’ commitment, harms wealth creation, and produces augmented transaction expenses in organizations all over the world (Caldwell, Hayes & Long, 2010). Scandals involving large corporations in recent years have led to calls for more attention being given to ethical behavior within companies, particularly among company leaders. A research area of interest is how ethical behavior among leaders impacts the environment of an organization and the behavior of its staff, including employees’ organizational dedication (Organizational Behavior Application Guide, 2011). Trust between leaders and a follower is essential for a company to be successful. If the followers don’t feel as if they can trust the leaders then there will not be open lines of communication within the company and without those nothing can get accomplished.

Leaders today’s face the challenge of earning the trust and commitment of staff members if they want to steer their companies to success in a highly aggressive international framework. Interpersonal trustworthiness is a personal evaluation of the probability that another person can be trusted to respect responsibilities intrinsic within an apparent social contract. The connection amid leader behavior and leader trustworthiness becomes a function of each person’s theoretical thinking as followers infer the understood and explicit elements of the social contract and the values that social contracts include. More and more, scholars have recognized the leader–follower connection as a chain of psychological contracts that increase to the level of a covenantal association (Caldwell, Hayes & Long, 2010).

Leaders e...

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...ched and that no matter what they do, right or wrong, someone always knows about it. Unethical behavior is something that is not easily overlooked or forgiven in the business arena and once a breach has been identified it takes a big toll on the company and reputation for a long time to come.

Organizational behavior is always in the spotlight and should be carried out in the most ethical way possible. The opportunities and benefits that are lost in the end from leaders who are not ethical are tremendous to most companies. Many times the damage that is done is beyond repair and sometimes costs the company its existence in the end. It is very important that organizations make sure that they have good ethical policies in place to guide leaders in the decisions that they make since they not only affect them personally but affect the company as a whole.