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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 “In the long run, those
who do not use power in a
great responsibility”
manner society considers
responsible will tend to
loose it” Keith Davis
“There is no such thing
as business ethics – only
ethics” Truett Cathy,
founder of Chick-fil-A
“Less than half of working
adults in the UK believe
that senior leaders are
people of high integrity.”
National Business Ethics
Study.
S. COVEY’S HABIT 2
BEGIN WITH THE END IN MIND
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
6
LEADERSHIP V MANAGEMENT
ESTABLISHING
DIRECTION
PLANNING AND
BUDGETING
DEVELOPING A
VISION OF THE
FUTURE, OFTEN
THE DISTANT
FUTURE, AND
STRATEGIES FOR
PRODUCING THE
CHANGES NEEDED
TO ACHIEVE THAT
VISION
ESTABLISHING
DETAILED STEPS AND
TIMETABLES FOR
ACHIEVING NEEDED
RESULTS; ALLOCATING
THE RESOURCES
NECESSARY TO MAKE
THOSE NEEDED
RESULTS HAPPEN
7
LEADERSHIP V MANAGEMENT
ALIGNING PEOPLE
ORGANISING AND
STAFFING
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
ESTABLISHING STAFFING,
RESPONSIBILITIES,
AUTHORITY AND
DELEGATION
REQUIREMENTS TO FULFIL
PLAN. PROVIDE POLICIES
AND PROCEDURES,
CREATE METHODS AND
SYSTEMS TO GUIDE STAFF
AND MONITOR
IMPLEMENTATION
8
LEADERSHIP V MANAGEMENT
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
9
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, coworkers 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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2...........................
3............................
4............................
5.............................
6.............................
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10............................
Seven Habits of Strong Ethical Leaders
1.
2.
3.
4.
5.
Ethical leaders have strong personal character
Ethical leaders have a passion to do right
Ethical leaders are proactive
Ethical leaders consider stakeholder’s interest
Ethical leaders are role models for the
organisations values
6. Ethical leaders are transparent and actively
involved in organisational decision making
7. Ethical leaders are competent managers who take
a holistic view of the firm’s ethical culture
http://www.toms.co.uk/one-for-one-en
http://www.youtube.com/watch?v=57TOTx5UEpA
http://www.youtube.com/watch?v=COhPsGLnMPY
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
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 Management
Intentional - does not consider ethical factors
Unintentional - casual or careless about ethical
considerations in business
20
ETHICAL DILEMMA 1
A 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.Face 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 loadbearing 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
Belief
• Insist on Integrity
Behaviour
The integrity
gap
• Matching our belief system to our actions (the external
with the internal)
The Ethical Leader understands the
relationship
•Ethical Knowledge
Codes, rules, knowing right from wrong
•Ethical Courage
Execution in the midst of pressure
•Ethical Conduct
Behaviour that aligns with knowledge
Dr. Ned Hill,
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. Integrity
2. Competence
3. Leadership (inspiration, decisiveness)
They defined integrity as leaders who were truthful, trustworthy, have character,
and have conviction
Dimensions of
Executive Ethical Leadership- Trevino, 2005
Moral Person:
Moral Manager:
(leader’s behavior)
(directs followers’ behavior)
- Traits
honesty, integrity, trust
- Behaviors
openness, concern for people,
personal morality
- Decision-making
values-based, fair
- Role Modeling
visible ethical action
- Rewards/Discipline
holds people accountable
for ethical conduct
- Communicating
conveys an “ethics/values” message
29
The Four Realms of Ethical Leadership,
Joseph Badaracco
As a private person
As a
boundary
agent
As an
economic
agent
As an organisational
leader
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
16
1
2
1
15
3
14
4
KEVs
13
KEY
14
5
9
ETHICAL
VALUES
12
6
11
7
2
10
9
8
1. Fairtrade
2. Supports Charity
3. Less water
4. Sustainability
5. Not tested on animals
6. Lower carbon footprint
7. Chemical free
8. Less Energy Used
9. Local
10. Organic
11. Natural
12. Healthy
13. Recycled
14. Less packaging
15. Supports communities
16. Socially responsible
THE PROCESS – Adapted from Chris Arnold Model
1.
2.
3.
4.
5.
6.
7.
8.
9.
Identify broad ethical values.
Define KEVs (Key Ethical Values).
Refine and define a single ethical value.
Define traditional company values (3 and 4 requires
understanding of customer trends and requirements).
Combine propositions.
Define the customer journey and channels of
communication.
Convey your message in an engaging way with
customer and through alignment within company.
Make it part of strategy and have a leader driving it.
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/tr
avel/budgettravel/6222484/P
olice-called-as-airline-bossberates-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.gatesfoundation.org/Visitor-Center
• http://www.bloomberg.com/bw/management/idol
ize-bill-gates-not-steve-jobs-11012011.html
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-Cola
Lush
Primark
Easy-Jet
Enron
Starbucks
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.