Business Ethics Module Chris Doran

Ethical Leadership

Can You Name Any Ethical Leaders?

Seminar – week 3

Pecha Kucha session

Seminar week 5 – Pecha Kucha sesison and selection of companies for assignments

Formative feedback with tutors to be announced

Topics

• Characteristics of an ethical leader

• Differences between managers and leaders

• Examples and ethical leaders case studies

• Ethical leadership models

Ethical Leadership Quotes

“With great power comes great responsibility”

“There is no such thing as business ethics – only ethics” Truett Cathy, founder of Chick-fil-A

“In the long run, those who do not use power in a manner society considers responsible will tend to loose it” Keith Davis

“Less than half of working adults in the UK believe that senior leaders are people of high integrity.” National Business Ethics Study.

S. COVEYS. COVEY’’S HABIT 2S HABIT 2BEGIN WITH THE END IN MINDBEGIN WITH THE END IN MIND

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LEADERSHIP AND MANAGEMENT

MANAGEMENT IS DOING THINGS RIGHT;

LEADERSHIP IS DOING THE RIGHT THINGS.

MANAGEMENT IS CLIMBING THE LADDER OF SUCCESS;

LEADERSHIP DETERMINES WHETHER THE LADDER IS LEANING

AGAINST THE RIGHT WALL

LONG-TERM VERSES SHORT-TERM

LEADERSHIP V MANAGEMENTLEADERSHIP V MANAGEMENT

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ESTABLISHING DIRECTION

DEVELOPING A VISION OF THE FUTURE, OFTEN THE DISTANT FUTURE, AND STRATEGIES FOR PRODUCING THE CHANGES NEEDED TO ACHIEVE THAT VISION

PLANNING AND BUDGETING

ESTABLISHING DETAILED STEPS AND TIMETABLES FOR ACHIEVING NEEDED RESULTS; ALLOCATING THE RESOURCES NECESSARY TO MAKE THOSE NEEDED RESULTS HAPPEN

LEADERSHIP V MANAGEMENTLEADERSHIP V MANAGEMENT

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ALIGNING PEOPLE

COMMUNICATING THE DIRECTION BY WORDS AND DEEDS TO ALL THOSE WHOSE COOPERATION MAY BE NEEDED TO INFLUENCE THE CREATION OF TEAMS THAT UNDERSTAND THE VISION AND STRATEGIES AND ACCEPT THEIR VALIDITY

ORGANISING AND STAFFINGESTABLISHING STAFFING, RESPONSIBILITIES, AUTHORITY AND DELEGATION REQUIREMENTS TO FULFIL PLAN. PROVIDE POLICIES AND PROCEDURES, CREATE METHODS AND SYSTEMS TO GUIDE STAFF AND MONITOR IMPLEMENTATION

LEADERSHIP V MANAGEMENTLEADERSHIP V MANAGEMENT

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MOTIVATING AND INSPIRING

ENERGISING PEOPLE TO OVERCOME MAJOR POLITICAL, BUREAUCRATIC AND RESOURCE BARRIERS TO CHANGE BY SATISFYING VERY BASIC BUT OFTEN UNFULFILLED HUMAN NEEDS

CONTROLLING AND PROBLEM SOLVING

MONITORING RESULTS AGAINST PLAN, IN DETAIL, IDENTIFYING DEVIATIONS AND THEN PLANNING AND ORGANISING TO SOLVE THESE PROBLEMS

Can You Name Any Ethical Leaders?

3 Major factors affecting Ethical Leadership

1. Individual Factors

2. Organisational Factors

3. Opportunity

Individual factors

• Education – the number of years spent in pursuit of academic knowledge, is a significant factor in the ethical decision-making process.

• Nationality – is the legal relationship between a person and the country in which he/she is born. This is being redefined by the likes of the EU.

• Age – No longer say “the older the wiser” recent studies suggest otherwise

• Locus of Control – relates to individual differences in relation to a generalised belief about how one is affected by internal versus external events or reinforcements.

Organisational Factors

• Working as a team, learning and discussing issues and behaving ethically or unethically.

• Corporate culture • Ethical culture• Significant others – peers, managers, co-workers and subordinates

• Obedience to authority – helps to explain why many employees resolve business ethics issues by simply following the directives of a superior

Opportunity

• Opportunity describes the conditions in an organisation that limit or permit ethical or unethical behaviour

• Opportunity results from conditions that either provide rewards, whether internal or external, or fail to erect barriers against unethical behaviour

• Does a company reward for a large sale for example and does it punish if gifts are accepted?

The Ethical Leader - Your Viewpoint

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Seven Habits of Strong Ethical Leaders

1. Ethical leaders have strong personal character2. Ethical leaders have a passion to do right3. Ethical leaders are proactive4. Ethical leaders consider stakeholder’s interest5. Ethical leaders are role models for the

organisations values6. Ethical leaders are transparent and actively

involved in organisational decision making7. Ethical leaders are competent managers who

take a holistic view of the firm’s ethical culture

http://www.youtube.com/watch?v=57TOTx5UEpA

http://www.youtube.com/watch?v=COhPsGLnMPY

http://www.toms.co.uk/one-for-one-en

The Diamond of Ethical Leadership - Muel Kaptein

P4 Model – Alan Chapman (2006)• The aim of an ethical leader is to reconcile the

organisational purpose (whether this be profit for shareholders, or cost-effective services, delivery, etc) with the needs and feelings of people (staff, customers, suppliers, local communities, stakeholders, etc) with proper consideration for the planet - the world we live in (in terms of sustainability, environment, wildlife, natural resources, our heritage, 'fair trade', other cultures and societies, etc) and at all times acting with probity - encompassing integrity, compassion, honesty, and truth. Probity enables the other potentially conflicting aims to be harmonised so that the mix is sustainable, ethical and successful.

3 Models of Management Ethics

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1. Immoral Management—A style devoid of ethical principles and active opposition to what is ethical.

2. Moral Management—Conforms to high standards of ethical behavior.

3. Amoral ManagementIntentional - does not consider ethical factorsUnintentional - casual or careless about ethical

considerations in business

ETHICAL DILEMMA 1A friend of yours gets a job as a bartender. When you visit the bar

your friend always serves you first regardless of how many people are waiting.

After a few months your friend complains to you that the manager is always mistreating him, giving him the worst shifts and reprimanding him for minor blunders, he feels victimised.

Sometime later you are in the bar with three work colleagues and buy a round of drinks. Your friend discretely charges you for one drink only. This continues to happen on further visits to the bar. Whilst you are uncomfortable with this you say nothing, you do not want to get your friend into trouble.

Eventually you decide to confront your friend, he laughs and says, “its only what this place deserves after the way I’ve been treated.”

Ethical dilemma 1 – questions:

Confronted with this situation, what would you do?

Who is wrong in this situation?

How different is being undercharged and being served before others?

Is your friends behaviour acceptable considering the way his boss treats him?

VALUES ARE IN CONFLICT – THE GREY AREAS

Ethics Starts from the top

7 Lenses: Learning the Principles and Practices of Ethical Leadership - Linda Fisher Thornton"It begins with ethical leadership," Thornton said. "Ethical leaders have a tremendous impact on how people in their organizations behave and what they achieve."

7 Lenses – Linda Thornton 1.F

ace the complexity involved in making ethical choices: Openly discuss the ethical gray areas and acknowledge the complexity of work life. Involve others in more of the ethical decisions. Be a leader who talks about the difficult ethical choices, and help others learn to take responsibility for making ethical decisions carefully.

2.Don't separate ethics from day-to-day business: Leaders must make it clear to their employees that ethics is "the way we operate" and not a training program or reference manual. Every activity, whether it is a training program, a client meeting or an important top management strategy session, should include conversations about ethics.

3.Don't allow negative interpersonal behaviors to erode trust: Make respect a load-bearing beam in your culture. Be an ethical leader who expects it and practices it.

4.Don't think about ethics as just following laws and regulations

5.Don't exempt anyone from meeting ethical expectations: Maintain the status of ethics as a total, absolute, "must do" in the organization. Hold everyone, particularly senior leaders and high profile managers, accountable. No exceptions.

6.Celebrate positive ethical moments: Be a proactive ethical leader, championing high ethical conduct and emphasizing prevention. Managers should talk about what positive ethics looks like in practice as often as they talk about what to avoid. Take time to celebrate positive ethical choices.

7.Talk about ethics as an ongoing learning journey, not a once-a-year training program: Integrate ethics into every action of the organisation — everything people do, touch or influence. Talk about ethics as an ongoing learning journey, not something you have or don't have. Recognize that the world changes constantly, and that ethical conduct requires that everyone remain vigilant.

Questions to Ponder

• As you enter the workforce are you more inclined to consider who the leader is of a company before you apply?

• There is a direct link between the length of time an employee stays with a company if the values of the employee match those of the company

Moral Dimension Error

• Insist on Integrity

• Matching our belief system to our actions (the external with the internal)

Belief Behaviour

The integrity gap

•Ethical KnowledgeCodes, rules, knowing right from wrong

•Ethical Courage Execution in the midst of pressure

•Ethical ConductBehaviour that aligns with knowledgeDr. Ned Hill,

The Ethical Leader understands the relationship

Kouzes and Posner survey•Using data from 1500 managers, they sought to identify those factors that managers mentioned as crucial to success,

•Most frequent answers, 1.Integrity2.Competence3.Leadership (inspiration, decisiveness)

They defined integrity as leaders who were truthful, trustworthy, have character, and have conviction

Dimensions of Executive Ethical Leadership- Trevino, 2005

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Moral Person: Moral Manager: (leader’s behavior) (directs followers’ behavior)

- Traits - Role Modeling honesty, integrity, trust visible ethical action

- Behaviors - Rewards/Discipline

openness, concern for people, holds people accountable personal morality for ethical conduct

- Decision-making - Communicating values-based, fair conveys an “ethics/values” message

The Four Realms of Ethical Leadership, Joseph Badaracco

4 arenas which a businessperson must balance and reconcile ethics

Non-Ethics in the workplace, job losses via text – The Accident Group

http://news.bbc.co.uk/1/hi/business/2949578.stm

How do you practice ethical leadership?

General guidelines:• Ethical leadership requires a clear and coherent ethical

framework on which the leader can draw in making decisions and taking action.

• Your ethical framework should agree with the ethical framework, vision, and mission of the organization or initiative.

• Ethics should be a topic of discussion. • Ethics should be out in the open. • Ethical thought must be connected to action. • Ethical leadership is a shared process. • Set up an ethical Code of Conduct• Invest in ethics training • Practice what is preached

• Suggested four specific actions for creating a climate of moral consciousness in organisations

1.Create clear policies that define the company’s ethics and conduct.

2.Hire only those whose characters and ethics are consistent with corporate standards.

3.Promote on the basis of performance and ethical conduct.

4.Create within employees the obligation and opportunity to report wrongdoing.

Leadership styles influencing ethical decisions

• “Leadership styles influence many aspects of organisational behaviour, including employee’s acceptance of and adherence to organisational norms and values. Styles that focus on building strong organisational values among employees contribute to shared standard of conduct. They also influence the organisation’s transmittal and monitoring of values, norms and codes of conduct. In short, the leadership style of an organisation influences how its employees act.”

• Business Ethics-Ethical Decision Making and Cases-Ferrell

Leadership styles influencing ethical decisions

• Types of leaders; the coercive leader, the authoritative leader, the affiliative leader, the democratic leader, the pacesetting leader and the coaching leader.

• A leaders’ style can affect their own and the organisation’s ethical behaviour

• Transactional/transformational leaders. Transformational leaders communicate a sense of mission, stimulate new ways of thinking , and enhance as well as generate new learning experiences. They also build commitment and respect for values that provide agreement on how to deal with ethical issues.

Chris Arnold – The Ethical Sphere

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1. Fairtrade2. Supports Charity3. Less water4. Sustainability5. Not tested on animals6. Lower carbon footprint7. Chemical free8. Less Energy Used9. Local10.Organic11.Natural12.Healthy13.Recycled14.Less packaging15.Supports communities16.Socially responsible

THE PROCESS – Adapted from Chris Arnold Model

1. Identify broad ethical values.2. Define KEVs (Key Ethical Values).3. Refine and define a single ethical value.4. Define traditional company values (3 and 4 requires

understanding of customer trends and requirements). 5. Combine propositions.6. Define the customer journey and channels of

communication.7. Convey your message in an engaging way with

customer and through alignment within company.8. Make it part of strategy and have a leader driving it.9. Seek buy in from all employees.

•"In the Army I was expected to protect people at all costs," Kopchinski said in a statement. "At Pfizer I was expected to increase profits at all costs, even when sales meant endangering lives.•"I couldn't do that," added Kopchinski, 45, who was fired by Pfizer in March of 2003, two years before the company pulled Bextra from the market over concerns it raised the risk of heart attacks and strokes.

Airplane company case

http://www.telegraph.co.uk/travel/budgettravel/6222484/Police-called-as-airline-boss-berates-own-staff.html

Why practice ethical leadership?• Ethical leadership models ethical behavior to the

organization and the community.• Ethical leadership builds trust. • Ethical leadership brings credibility and respect, both

for you and for the organization. • Ethical leadership can lead to collaboration. • Ethical leadership creates a good climate within the

organization. • If you have opposition, or are strongly supporting a

position, ethical leadership allows you to occupy the moral high ground.

• Ethical leadership is simply the right way to go. • Ethical leadership affords self-respect.

• Below are some of the main themes and issues leaders have to encounter in regards to ethics,

• Promotions• Work-life balance• Employee development• Reward• Employee relations• Technology discipline• Grievances• Redundancy• Discrimination• Sexual harrassment• Substance abuse• Smoking • Emails/Social Networks

The Ethical Leader?

• http://www.bloomberg.com/bw/management/idolize-bill-gates-not-steve-jobs-11012011.html

http://www.gatesfoundation.org/Visitor-Center

The Pier –Alison Richards

http://www.oxfordmail.co.uk/news/1932138.alison_honoured_just_in_time/

ETHICAL DILEMMA 2

You are the IT Manager of a medium size credit card company. It is Monday morning and you are preparing for the launch of a new promotion campaign which you must present to the MD at 11.30 am. Fortunately, Paul, one of your staff, agreed to work on the marketing figures over the weekend for you.

The Hardware Manager walks into your office explaining that on carrying out a routine check on the computer Paul borrowed from the pool, he noticed links to various pornography sites in the history file of the browser.

There is a strict code of ethics prohibiting employees from accessing sites containing ‘material of an explicit nature’ and is tantamount to gross misconduct and may result in immediate termination

After some thought you ask Paul to come to your office and confront him with the problem. Paul was very embarrassed and could not understand how it could have happened. Then Paul said he did allow a friend to use the laptop to check his emails. This does not make you feel any better as the code of ethics also prohibits the use of IT equipment by anyone other than employees, also you were on the committee that put the code in place.

Ethical dilemma 2 – questions:

Set out the possible courses of action open to you.

What are your main ethical problems in this situation?

What would you do and why?

Based on your answer, what are the apparent benefits and limitations of the code of ethics in this case?

Do you consider the following people to be ethical leaders? Why?

• David Cameron?• Barrack Obama?• George Bush?• Tony Blair?• Mother Theresa?• Alex Ferguson?• Donald Trump?• Alan Sugar?• Richard Branson?• Hillary Clinton?

The CEOs of the following companies

Coca-ColaLush PrimarkEasy-JetEnronStarbucks

The 4-V Model – Dr Bill Grace

•Aligns the internal (beliefs and values) with the external (behaviours and actions)

•Values. Ethical leadership begins with an understanding of and commitment to our individual core values. By first discovering the values at the core of our identities, we begin the process of integrating our unique values with our choice-making on all levels of our personal and civic lives.

•Vision. Vision is the ability to frame our actions – particularly in service to others.

•Voice. Claiming our voice is the process of articulating our vision to others in an authentic and convincing way that animates and motivates them to action.

•Virtue. Understanding that we become what we practice, we foster virtue by practicing virtuous behaviour – striving to do what is right and good. In this way, we develop the character of virtue. In particular, virtue stands for the common good. Ethical leaders ask, “How are my values, vision and voice in keeping with the common good?”

•Service.  Service connects Vision to Values, indicating that when our values are tested and tried through service to others, the latent vision within them is often revealed.

Polis.  “Polis” is the Greek word for city, and the root of the English word, “politics.”  As we learn to give voice to our vision in the context of a public act, we are engaged in the art of politics.

Renewal.  As Voice returns to Values, the territory of our work changes to renewal.  As we express our voice in multiple ways, we need to break from the action on a regular basis to consider if our actions are congruent with our values and vision.