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Introduction to Ethical Leadership

Jennifer Sawayda

Program Specialist

Anderson School of Management

University of New Mexico

Albuquerque, NM

© O.C. and Linda Ferrell

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What Is It?

• Ethical leadership involves leading others to obtain organizational goals in an ethical manner.– Ethical leaders view employees not

simply as followers, but as stakeholders crucial to obtaining shared organizational goals

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Benefits of Ethical Leadership

• Evidence shows that ethical leadership is positively related to:– Employee job satisfaction

• An LRN survey found that 82% of respondents would take a pay cut to work for an ethical company

– Shared values– Organizational citizenship– Consumer value

• Consumers are more likely to pay higher prices for ethically produced products

– Strong stakeholder relationships

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Benefits of Ethical Leadership

• Ethical leadership is negatively related to:– Employee turnover– Employee deviance– Organizational misconduct– Despotic leadership style

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Characteristics of Ethical Leaders

• Model organizational values– Hold themselves accountable for ethical

well-being of firm

• Place organization’s interests over own• Train others as leaders• Understand limitations• Empathetic• Align employees behind common vision

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Principles and Values

• Ethical leaders promote shared principles and values in an organization– Principles: universal boundaries for

behavior that shouldn’t be violated• Human rights, justice

– Values: enduring beliefs and ideals that are socially enforced

• Teamwork, trust, employee empowerment

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Elements of an Ethical Culture

• Strong internal controls• Ethics program• Open discussion of ethics concerns• Communication between leaders and

followers• Empowered employees

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Ethical Leaders Support Ethics Programs

• Code of Ethics • Support from top management• Somebody to take charge of program• Ethics training• Reporting mechanisms• Monitoring ethical performance• Continuous improvement

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Leadership Styles

• Transactional leader– Negotiate for levels of employee performance

• Transformational leader– Raise the level of employee commitment and inspiration

• Coercive leader– Uses threat of punishment to obtain compliance

• Charismatic leader– Skilled at getting employees to stand behind a common goal or

mission

• Authentic leader– Passionate about the goals and mission of the company– Continually display corporate values in the workplace– Try to form long-term relationships with stakeholders

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The Dangers of Narcissism

• It was once thought that narcissistic behaviors were needed to succeed in business

• But evidences shows that hostility toward others, coercion, and manipulation are negatively related to ethical leadership– Corporate psychopaths often exhibit these

behaviors• Seem respectable but are ruthless • Organizational bullying is common—to the

detriment of the organization

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Communication between Ethical Leaders and Employees

• Ethical leaders should know when to use the four different types of communication– Interpersonal communication: When two or more

people interact with each other– Small group communication: When small groups

engage in interaction and decision making– Nonverbal communication: Communication

expressed through body language, expressions, actions, etc.

– Listening: Paying attention to both verbal and nonverbal behavior

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Conflict Management

Competing

Avoiding Accommodating

Collaborating

Compromising

Asse

rtive

ness

Cooperation

high

low high

Kenneth W. Thomas and Ralph H. Kilmann (March 2, 2010). Thomas-Kilmann Conflict Mode Instrument: Profile and Interpretative Report. © CPP, Inc.

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Conflict Management, cont.

• There are five conflict management styles:– Competing: Win at all costs– Avoiding: Avoid conflict at all costs– Accommodating: Will accommodate the

other side no matter what– Compromising: Believe the best solution

is for each side to give something up– Collaborative: Seeks a win-win solution;

most common with ethical leadership

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Employee-Centered Leadership

• Employees are active participants in maintaining an ethical culture

• Employees can be encouraged to practice leadership– Open communication culture– Mechanisms for dissent (e.g. hotlines)– Leadership training