The ability or authority to guide and direct others toward a goal.
Most people agree that effective leadership is essential for any organization.
Occurs when managers overlook or stifle the importance of core values in their business decisions.
Thought to occur because:
1. The belief that normative values do not apply to managerial decisions
2. The belief that facts and values can be separated in decision making
3. The belief that normative values are outside the realm of business.
7 habits of strong ethical leaders
1. Ethical leaders have strong personal character
2. Ethical leaders have a passion to do right
3. Ethical leaders are proactive
4. Ethical leaders consider all stakeholders’ interests
5. Ethical leaders are role models for their organization’s values
6. Ethical leaders are transparent and actively involved in decision making
7. Ethical leaders take a holistic view of the firm’s ethical culture
Benefits of ethical leadership
1. Ethical leadership has a direct impact on the corporate culture of the firm
2. It can lead to higher employee satisfaction and employee commitment
3. Creates strong relationships with external stakeholders
4. It is a foundational requirement for impacting the long-term market valuation of the firm.
Federal Sentencing Guidelines for Organizations
Mandates that public firms have ethics programs in place to detect organizational misconduct.
Approaches to leadership
1. Compliance based approach
2. Integrity based approach
Compliance based approach
An approach to leadership. Leaders that adopt this approach emphasize obedience to rules and regulations and set processes in place to ensure compliance.
Such an approach deters illegal conduct and stresses a culture of avoidance.
Those in charge of the ethics in the organization are likely called compliance officers or risk managers
integrity based approach
An approach to leadership. It views ethics as an opportunity to implement core values. Leaders who adopt this take responsibility for the firm’s ethical culture and hold employees accountable for practicing ethical behaviors and core practices.
Usually have chief officers, human resource managers, and board member committees involved with the ethics and compliance program.
Classification of leader types
1. Unethical leader
2. Apathetic leader
3. Ethical leader
Reality is that each leader type falls on a continuum or line and not in a box.
A leader type. This leader is usually egocentric and often does whatever it takes to achieve personal and organizational objectives.
They perceive ethics codes, compliance regulations, and industry standards as optional.
Psychopathic leader (corporate psychopath)
A type of unethical leader. They are characterized as having superficial charm, no conscience, grandiose self-worth, little or no empathy, and enjoyment in flouting the rules.
Companies with these types of leaders usually experience various problems
Problems that result from having a psychopathic leader
1. Heightened level of conflict
2. Lower employee commitment
3. Higher organizational constraints
4. Heavier workloads
5. Poor levels of training
6. Lower job satisfaction
7. Increase in employee absenteeism
A leader type. These leaders are not necessarily unethical, but they care little for ethics within the company. They often view ethics as relative and optional in a business context.
They often display no passion for the firm or the mission of the organization.
A leader type. These leaders include ethics at every operational level and stage of the decision making process.
They view employee collaboration as an important resource.
Employees are seen as major co-contributors of value.
Ethical business conflicts
These occurs when there are two or more positions on a decision that conflicts with organizational goals.
Ways employees can choose to approach a conflict
1. Ignore the issue
2. Confront the other person
3. Report the conflict to management
4. Use a hotline
5. Engage in external whistle-blowing
Conflict management styles
*They are based on two dimensions, assertiveness and cooperativeness
One of the dimensions of conflict management styles. It is acting in one’s own best interests.
One of the dimensions of conflict management styles. It means working toward the best interests of the other person.
Competing Conflict Style
One of the conflict styles of management. Leaders having this conflict management style are highly assertive and not very cooperative.
They believe in winning at any cost and measure success by how much the other side loses.
They are usually not considered to be ethical because their conflict style makes them abusive and less likely to consider the concerns of employees and other stakeholders.
Likely to be more power-oriented and narcissistic
Avoiding Conflict Style
One of the conflict styles of management. They are uncooperative and non-assertive. Leaders of this approach are not effective because they avoid conflict at any costs–even if it leads to misconduct.
Even if they are aware of misconduct, they have no desire to manage it.
Accommodating Conflict Style
One of the conflict styles of management. Leaders who adopt this style are highly cooperative but non-assertive.
They will give in to the other side even if it means sacrificing their own interests and values.
Compromising Conflict Style
One of the conflict styles of management. Leaders who adopt this management style are in between the assertiveness and cooperativeness dimensions. They believe that the best approach to resolving conflict is for each side to give something up in order to gain something of value.
This management style is useful in resolving ethical dilemmas when all solutions have disadvantages.
Collaborating Conflict Style
One of the conflict styles of management. It is the most advantageous. Leaders who adopt this style are cooperative and assertive. Rather than immediately compromising, these leaders collaborate with others to find a creative way to obtain a beneficial solution.
They desire to meet the needs of stakeholders, but they also strongly adhere to organizational values and principles.
It is the role of the ethical leader to facilitate, foster, and model this conflict style.
Dimensions of ethical communication
A dimension of ethical communication. Leaders create this by developing a culture where ethics is frequently discussed.
Openness and leader accessibility are important in addressing and resolving ethical issues.
A dimension of ethical communication. It is a two-way process in which the communicator communicates with superiors and subordinates.
It can be a formal or informal process.
Types of communication
1. Interpersonal communication
2. Small group communication
4. Nonverbal communication
A type of communication and is the most well-known form of communication ad occurs when two or more people interact with one another.
It provides an intimate opportunity for the ethical leader to receive or dispense information.
Small group communication
A type of communication. It is growing in organizations and becomes increasingly important to ethical decision making.
It is communication within groups.
A negative side effect of small group communication. It occurs when one or more group members feel pressured to conform to the group’s decision even if they personally disagree
Refers to the fact that a group is more likely to move toward a more extreme position than the group members might have done individually.
A type of communication. It is communication expressed through actions, body language, expressions, or other forms of communication not written or oral.
It provides major clues about an individual’s emotional state.
Eg. Gestures, facial expressions, proximity, time, dress, and paralanguage
A type of nonverbal communication. It is the way we walk, such as volume, inflection, tone, and rhythm.
It provides important indicators of the person’s emotional status.
A type of communication. It involves paying attention to both verbal and nonverbal behavior.
Important for ethics, employee morale, establishing credibility and trustworthiness with employees.
This occurs when leaders and followers share the same vision, ethical expectations, and objectives for the company.
Claims that leaders form unique relationships with followers through social interactions.
Code of ethics
One of the ways of communicating ethical values to employees. It provides important guidelines for employees on how to act in different situations.
To be effective, it should be accessible and supported by every level of the company.
One of the ways of communicating ethical values to employees. ______ allows employees to practice the guidelines that are outlined in the ode of ethics.
Effective __________ programs teach employees how to apply the firm’s values to some of the organization’s most common ethical risk areas.
Ways of communicating ethical values to employees
1. Code of ethics
2. Ethical training
Ways to facilitate employee feedback
2. Anonymous surveys
3. Ethics audits
Ingredients for leadership
Strong ethical leaders must have the right kind of moral integrity or ______. Such integrity must be transparent; in other words, they must “do in private as if they were in public.”
An ingredient for leadership. It involves managing the responsibilities and duties of being a leader. A leader must assume his or her responsibilities to lead effectively.
The most effective ethical leaders possess the ability to manage themselves and their relationships with others effectively, a skill known as this.
These types of leaders are skilled in self-awareness, self-control, and relationship building
Leadership styles based on emotional intelligence
1. Coercive leader
2. Authoritative leader
3. Affiliative leader
4. Democratic leader
5. Pacesetting leader
6. Coaching leader
A leadership style based on emotional intelligence. This type of leader demands instantaneous obedience and focuses on achievement, initiative, and self-control.
This style can be effective during times of crisis or during a turnaround.
But most of the time it creates a negative climate for organizational performance.
A leadership style based on emotional intelligence. Considered to be one of the most effective styles. It inspires employees to follow a vision, facilitates change, and creates a strongly positive performance climate.
A leadership style based on emotional intelligence. Values people, their emotions, and their needs, and relies on friendship and trust to promote flexibility, innovation, and risk taking.
A leadership style based on emotional intelligence. Relies on participation and teamwork to reach collaborative decisions. This style focuses on communication and creates a positive climate for achieving results.
A leadership style based on emotional intelligence. Can create a negative climate because of the high standards that he or she sets.
This style works best for attaining quick results from highly motivated individuals who value achievement and take the initiative.
A leadership style based on emotional intelligence. Builds a positive climate by developing skills to foster long-term success, delegating responsibility, and skillfully issuing challenging assignments.
A type of leader that demonstrate mindfulness of themselves and their own emotions, a belief that goals can be met, and a caring attitude toward others within the organization.
These abilities create resonance within the organization, enabling employees to work toward common goals.
They create an ethical corporate culture as well as leader-follower congruence.
LEaders that attempt to create employee satisfaction through negotiating, or “bartering” for desired behaviors or levels of performance.
They focus on ensuring required conduct and procedures are implemented.
Can positively influence the corporate culture.
Leaders that strive to raise employees’ level of commitment and foster trust and motivation.
These leaders communicate a sense of mission, stimulate new ways of thinking, and enhance as well as generate new learning experiences. They strive to promote activities and behavior through a shared vision and common learning experience.
Can positively influence the corporate culture.
Leaders that are passionate about the company, live out corporate values daily in their behavior in the workplace and form long-term relationships with employees and other stakeholders.
These leaders do not mimic other leaders, but they do learn by observing them.
They demonstrate core values and integrate these values into the operation of the firm.
A model that was created to describe an ethical leader’s duty to recognize ethical issues, avoid misconduct whenever possible, discover ethical risk areas, answer stakeholder concerns when an ethical issue comes to light, and recover from a misconduct disaster by improving upon a weakness in the ethics program.
Ethics continuity planning
Involves the identification of risk areas and the development of a response plan to deal with major issues. By imagining worst case scenarios, leaders brainstorm with others in the firm the best way to avoid them.
Part of the avoid of the RADAR model.
A good discovery tool (in RADAR model) to discover ethical issues.
Intended to carefully review such ethics initiatives as ethics programs, codes of conduct, hotlines, and ethics training programs
Steps of recovery (in RADAR model)
1. Take corrective action
2. Compensate stakeholders harmed by the misconduct
3. Express regret for the misconduct
4. Reinforce the firm’s reputation with positive messages
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