Topic 7

Leadership : Ethics, Values, and Attitudes

ETHICAL DECISION-MAKINGETHICAL DECISION-MAKING

Leadership: Ethics,Values,and Attitudes

“Leadership cannot just go along to get along… Leadership must meet the moral challenge of the day.”

~Jesse Jackson

24 % of Wall Street executives say illegal or unethical conduct

may be necessary to be successful in finance.

(Time, 7/30/2012)

Introductory Comment

Leaders can use power (as we discussed in topic 6) for good or ill, and the leader’s personal values may be one of the most important determinants of how power is exercised or constrained.

The mere possession of power, of any kind, leads inevitably to ethical questions about how that power should and should not be used.

Introductory Comment (cont)

The challenge of leadership becomes complex when we consider how individuals of different backgrounds, cultures, and nationalities may hold quite different values yet be thrown into increasingly closer interaction.

Leadership and “Doing the Right Things” (Bennis)

Leaders face dilemmas that require choices between competing sets of values and priorities (i.e.,satisfying multiple stakeholders).

Leaders set a moral example to others that becomes the model for an entire group or organization, for good or bad.

Leadership and “Doing the Right Things”

Leaders should internalize a strong set of ethics, principles of right conduct, or a system of moral values.

Good leaders tend to align the values of their followers with those of the organization or movement.

Ethics and Stakeholders

Stakeholders: people or groups that have an interest in the organization. Stakeholders include employees, customers,

shareholders, suppliers and others. Stakeholders often want different outcomes and

leaders must work to satisfy as many as possible. Ethics: a set of beliefs about right and wrong.

Ethics guide people in dealings with stakeholders and others, to determine appropriate actions.

Leaders often must choose between the conflicting interest of stakeholders.

Ethics

EthicsRules and principles that define right and

wrong conduct

Ethics are principles of right conduct or a system of moral values

Ethics

It is difficult to know when a decision is ethical. Here is a good test:

Leader Ethics: If a leader makes a decision falling within usual standards, is willing to personally communicate the decision to stakeholders, believes friends would approve ,believes it would be okay if it was a lead story in tomorrow’s news----- then it is likely an ethical decision.

Ethical Origins

Societal Ethics: standards that members of society use when dealing with each other.

Ethical Origins

Professional Ethics: values and standards used by groups of managers in the workplace.

Individual Ethics: values of an individual resulting from their family & upbringing.

What Determines Ethical Behavior?

According to research, the single most important factor in fostering corporate behavior of a high ethical standard is the actions of the leader(s).

Unethical business practice is most often the result of several employees (possibly at varying levels in the organization) tacitly (if not explicitly) cooperating with others.

Leader Behavior

Actual leader behavior can be described (in the broadest of terms ) as fitting into 3 ethical types:Immoral

Amoral

Moral

Why Behave Ethically?

Leaders should behave ethically to avoid harming others.

Unethical leaders run the risk for loss of reputation.

Unethical behavior might be exposed.

Whistleblower

A whistleblower is an employee who reports real or perceived wrongdoing under the control of his or her employer to those who may be able to take appropriate action.

Ethical Decisions

A key ethical issue is how to disperse harm and benefits among stakeholders.If a firm is very profitable for two years, who should

receive the profits? Employees, managers and stockholders all want a share.

Should we keep the cash for future slowdowns?

What is the ethical decision?

Ethical Decisions

Should you withhold payment to suppliers as long as possible to benefit your firm?

Should you pay maximum or minimum levels of severance pay to laid off workers?

Should you buy goods from overseas firms that hire children?

What Are Values?Values are “constructs representing

generalized behaviors or states of affairs that are considered by the individual to be important.”---(simply said, representations of our behavior based on what we see as important).

Values play a fairly central role in one’s overall psychological makeup and can affect behavior in a variety of situations.

What Are Values?

Individuals in the same work unit can have considerably different values.

We can only make inferences about people’s values based on their behavior.

How do values develop?

Some Influences On the Development Of Personal

Values

Personal Value

System

Family

Media

Technology

Religion

Education

Peers

Four Generations of WorkersThe pervasive influence of broad forces tend to

create common value systems among people growing up at a particular time that distinguish them from people who grow up at different times.

Each generation is molded by distinctive experiences during their critical developmental periods:The Veterans / Traditionalists (pre 1946)The Baby Boomers (1946-1964)The Xers (1965-1980)The Millennials (1980-2000)

Generational ValuesThe results of a scientific sampling and

research has found little evidence of a generation gap in BASIC VALUES.

Values are the result of education and experience.

Once established, it is relatively difficult to change a leader’s values.

How Values Impact LeadershipValues are a primary determinant in what data

are reviewed by leaders and how they define problems.

Values often influence leader’s perceptions of individual and organizational successes as well as the manner in which these successes are achieved.

Values help leaders choose right from wrong, and between ethical and unethical behavior.

How Values Impact LeadershipLeaders tend to like followers with similar

values and dislike those with dissimilar values.It is important for leaders to surround

themselves with followers who possess divergent values.

Leaders are motivated to act in ways consistent with their values, and they typically spend most of their time engaged in activities that are consistent with their values.

Kohlberg

6 Stages of Moral DevelopmentOrganized into 3 Higher Order Levels:

Pre-conventional: values based on self-interest

Conventional: values based on gaining approval of others

Post-conventional: values based on universal, abstract principles

Developmental Levels Of Moral Reasoning

Preconventional - the level in which a person’s criteria for moral behavior are based primarily on self-interest

Conventional - the level the criteria for moral behavior are based primarily on gaining others’ approval

Postconventional - the level in which the criteria are based on universal, abstract principles that may even transcend the laws of a particular society

Stages Of Moral ReasoningPreconventional Level

Stage 1: “Bad” behavior is that which is punished. Stage 2: “Good” behavior is that which is concretely rewarded.

Conventional Level Stage 3: “Good” behavior is that which is approved by others;

“bad” behavior is that which is disapproved by others.

Stages Of Moral Reasoning continuedConventional Level

Stage 4: “Good” behavior conforms to standards set by social institutions; transgressions lead to feelings of guilt or dishonor.

Postconventional Stage 5: “Good” behavior conforms to community standards set

through democratic participation; concern with maintaining self-respect and the respect of equals

Stage 6: “Good” behavior is a matter of individual conscience based on responsibly chosen commitments to ethical principles.

Leadership and Org. ValuesOrganizational values represent the principles by

which employees are to get work done and treat other employees, customers, and vendors.

The top leadership’s collective values play a significant role in determining organizational values and culture.

Research has shown that employees with values similar to the org are more satisfied and likely to stay; those with dissimilar values are likely to leave.

Leadership and Org.Values It is vital for a leader to

set a personal example of values-based leadership to make sure that clear values guide everyone’s behavior in the organization.

“It’s important that people know what you stand for. It’s equally important that they know what you won’tstand for.”

~Mary Waldrop

Leadership and Org.Values

If there is indifference or hypocrisy toward values at the highest levels, then it is fairly unlikely that principled behavior will be considered important by others throughout the organization.

Principle-Centered Leadership( Covey )

The principle-centered approach postulates a fundamental interdependence between the unique roles of each level:PersonalInterpersonalManagerialOrganizational

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Principle–centered Leadership

Fundamental interdependence between the personal, interpersonal, managerial, and organizational levels of leadership

Unique roles of each are:

•Personal – be a trustworthy person in terms of both character and competence.

•Interpersonal – a lack of trust leads to self-protective efforts to control and verify each other’s behavior.

•Managerial – empowering others requires a trusting relationship and requires team building, delegation, communication, negotiation, and self-management.

•Organizational – creativity requires the organization’s structure, systems (e.g. training, communication, reward), strategy, and vision be aligned and mutually supportive.

Empirical Studies on Values and the Ethical Dimensions of

Leadership.People with strong value systems tend to

behave more ethically, unless situations are highly competitive and unsupervised or there is no formal ethics policy governing behavior. Leaders with a strong sense of values and moral reasoning will be more effective.

Attitudes

What are Attitudes?

Attitudes are narrower than values; attitudes are positive or negative feelings about some person, object, or issue.

Like values and traits, attitudes affect behavior in some but not all situations.

Leader Attitudes About Themselves

Self concept refers to the collection of attitudes leaders have about themselves.

Self-esteem refers to the overall positiveness or negativeness of a person’s feelings about themselves.

Leader Attitudes About Subordinates

McGregor stated differences in managerial behaviors were due to differences in assumptions about human nature. Managers with a Theory X attitude believe people are lazy. Managers with a Theory Y attitude believe people are inherently trustworthy and hardworking, and as a result usually allow followers more autonomy and responsibility.

Theory X – Theory Y

4 Possible Styles

(Handout)

Implications for Leaders

Leaders who have a positive self-concept and ascribe to a Theory Y philosophy typically give and accept positive feedback, expect others to succeed, and give others autonomy in completing tasks.

Leaders with a positive self-concept and a Theory X philosophy tend to be bossy, pushy, and impatient; they also generally take on a dictatorial leadership style.

Implications for Leaders (cont.)

Leaders with a negative self-concept and a Theory Y philosophy may seem afraid to make decisions, unassertive, and self-blaming.

Finally, leaders with a negative self-concept and a Theory X philosophy blame others for the work unit’s problems, are pessimistic about the possibility of resolving personal or organizational problems, and generally promote feelings of hopelessness among followers.

Perceptions Of Unethical Business Practices

Percent of people expressing belief business would...

48%38% 37%

62%

42%44%

Harm theenvironment

Endangerpublic health

Sell unsafeproducts

Knowingly sellinferiorproducts

Deliberatelycharge inflated

prices

Risk employeehealth and

safety

How Good People Justify Doing Bad Things

Moral justificationEuphemistic labelingAdvantageous comparisonDisplacement of responsibility

How Good People Justify Doing Bad Things, continued

Diffusion of responsibilityDisregard or distortion of

consequencesDehumanizationAttribution of blame

Implications for Leadership Practitioners

Leadership practitioners should expect to face a variety of challenges to their own system of ethics, values, or attitudes during their careers.

Interacting with individuals and groups holding divergent and conflicting values is inevitable.

Implications for Leadership Practitioners

Leaders in particular have a responsibility not to let their own personal values interfere with professional leader-subordinate relationships.

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Summary

• There is a strong relationship between ethics, values, attitudes, and leadership

• More than just the content of what one believes is right and wrong, how one makes ethical decisions is critical.

• Ethical dilemmas often involve a choice between two “rights” rather than right and wrong.

• Recent research has explored the interdependencies between effective leadership and particular value systems

Questions for Thought

What ethical principles do I value most? How well have I done in upholding them? What can I do to improve?

What ethics are explicitly valued in my organization? How can I be more effective in reinforcing them?

Questions for Thought (cont.)

Have I experienced a situation at work when I knew the right action to take but felt I should or could not take it because it would not be accepted or valued?

When I come to work each day, do I feel I have to put aside ethics or values that are important to me in order to get along and be successful? If so, what are these ethics or values, and what makes you think you have to put them aside?

Questions for Thought (cont.)

How can I better support ethical behavior among my colleagues, team members, and others in my organization? Are there significant differences between my own ethics and those of my colleagues?