Ethical values of transactional and transformational leaders

Canadian Journal of Administrative Sciences, Dec 2001 by Rabindra N Kanungo

The controversy as outlined above regarding whether the two forms of leadership influence can have moral foundations and, if so, how they are similar or different from each other calls for some resolution. This paper attempts to achieve such a resolution by arguing that the two types of influence process have fundamentally different ethical understandings. The ethical justifications for the behaviours of transactional and transformational leaders can be understood better when viewed from two different ethical perspectives: the teleological and the deontological approaches. The paper therefore first identifies the dimensions of ethical leadership behaviour and then examines the moral foundations of transactional and transformational leadership by grounding them in the teleological and the deontological approaches respectively. In exploring the morality of the two leadership forms in terms of the two ethical approaches, the paper also identifies the implicit motives, values, and assumptions underlying leadership behaviours and influence processes.

Dimensions of Ethical Leadership

How can we judge a leader's behaviour to be ethical or unethical regardless of whether the leader is exhibiting the transactional or transformational influence mode? The term "ethical" means that which is morally good or that which is considered morally right, as opposed to that which is legally or procedurally right. According to Thomas Aquinas, ethical nature of one's behaviour should be judged on the basis of three factors: the motive of the actor which is the primary source of one's behaviour, the manifest behaviour itself, and the social context in which the behaviour takes place (Kreeft, 1990). If we take these three factors into account, the leader, in order to be ethical, must engage in virtuous acts or behaviours that benefit others, and must refrain from evil acts or behaviours that harm others. Both Socrates and Plato considered virtuous acts to be the basis of morality (White, 1993). But these acts must stem from the leader's altruistic rather than egotistic motives or intentions. Furthermore, in order to behave judiciously in a morally right manner, the leader must take into consideration the demands of the social context or situation he/she faces and the moral consequences or outcomes of his or her actions in the specific situation. For example, protecting an employee from a threat of dismissal because of employee incompetence is morally wrong, whereas protecting the employee from such threat caused by an arbitrary decision on the part of top management may be ethically justified.

In order to get all three factors morally right in leadership acts, leaders must pay attention to their own motives, their behavioural strategies and tactics of influence, and their worldviews that form the basis of interpreting the social situations with which they interact and the resulting outcomes. Above all, leaders' personal moral development results from character formation or cultivation of values through the practice of harbouring altruistic intent, engaging in virtuous acts, and interpreting social situations consistent with their worldviews. Aristrotle emphasized the role of character formation through practice and habit while considering the nature of moral development of an individual. As White (1993) remarks, "by making our character, will, and intentions central elements of moral virtue, Aristrotle pointed out how critical it is to study our motivation and master the inner forces that could lead to moral compromises" (p. 4). Ethical leadership therefore manifests itself in three dimensions as depicted in Figure 1 (Kanungo & Mendonca, 1998). In ethical leadership, the motives, acts, and characters of leaders result in the moral development of both the leader and the followers, which in turn serve the interests of their organizations and society at large (Kanungo & Mendonca, 1996).