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8/6/2019 Ethical Leadership Final
1/22
8/6/2019 Ethical Leadership Final
2/22
EMBA - AHMEDABAD UNIVERSITY Malav J. Varu
2Leadership Project: ETHICAL LEADERSHIP
BUSINESS
ETHICS
Good Bad
Good
Bad
The Ethics Grid
In terms of the Ethics Grid, it is demonstrated that:
More opportunities exist in the Good/Good mode than we realize. Few companies that operate
in the Good Business/Bad Ethics mode succeed over the long term. More understanding is
needed for the hard choices that exist in the Good Ethics/Bad Business mode.
8/6/2019 Ethical Leadership Final
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EMBA - AHMEDABAD UNIVERSITY Malav J. Varu
3Leadership Project: ETHICAL LEADERSHIP
THE ETHICAL LEADER
There is more than enlightened self-interest at work among leaders who conform to rigorous
ethical guidelines and pressures. What really motivates them is an interest in developing ethical
attitudes toward living, learning, and working. When it appears that the market will respond
favourably to apparent changes in ethical behaviours, the ethical leader is more concerned that
ethical values dominate management thinking. He or she understands these two critical
principles:
1. Ethical initiatives that come entirely from a business perspective may have temporary
effects, but will erode when business pressures or market data demand a change in strategy.
2. If ethical initiatives originate for ethical reasons, then changes will be more lasting and will be
less influenced by market manipulation. The ethical leader knows that a true change in business
ethics requires a frontal assault on who we are not just token efforts to increase knowledge about
what one can and cannot do according to a code of ethics. At its most basic level, the ethical
leader thinks about others.
8/6/2019 Ethical Leadership Final
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EMBA - AHMEDABAD UNIVERSITY Malav J. Varu
4Leadership Project: ETHICAL LEADERSHIP
As for codes of ethics, in many corporations they have had little impact on employee actions.
This is largely because they have sought only to protect firms from the actions of their
employees and have stressed legalese; most codes have neglected the important ethical issues
related to culture, environment, people, customers, and communities. There is no real power in
pushing codesthat is, there is no dynamic growth in codes. Instead, ethical growth usually
emerges as a result of meaningful dialogue about tough issues. Ethical leaders are willing to
pursue and engage in such dialogue.
The Ethical Leadership Scale
Anyone who holds a position of leadership can consider their decision on this scale of
importance and ability to make choices. It is designed to help them assess the current level of
ethical functioning in their organizations and to explore how they can gain competitive
advantage by developing an ethical edge. Throughout the book, variations of the Ethical
Leadership Scale, shown below, are provided to facilitate this approach. Here it appears in its
basic form, to help leaders determine, in a general way, their current level of ethical functioning,
and to prompt them to decide what their goal is in relation to ethics.
THE ETHICAL LEADERSHIP SCALE
5.0 Ethical Exemplar 4.0 Ethical Culture 3.0 Ethical Leadership 2.0 Compliance with Internal and External Laws and Regulations 1.0 Ethical MinimumStay Out of Trouble
Level-four or level-five goal is required to turn an ethical burden into a competitive edge, and
exemplary leadership is required to achieve that edge. Ethical leadership is more than complying
with legal regulations and accounting standards. It is setting the standard for principle-driven
relationships. Exemplars provide us with a model of how leadership can create an ethical culture.
These are leaders who, by their example, buttress the assertion that trust can be rebuilt in
corporations.
8/6/2019 Ethical Leadership Final
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EMBA - AHMEDABAD UNIVERSITY Malav J. Varu
5Leadership Project: ETHICAL LEADERSHIP
5 STEPS TOWARDS ETHICAL LEADERSHIP DEVELOPMENT
Here listed below are the 5 steps to be considered in establishing Ethical Leadership in a system.
Each one of these plays an important role in moulding an organisation in the right form and right
mix to lay the foundation and develop ethical leadership culture.
Creating an EthicalCulture,addresses the relationship of ethics to corporate culture. Itshows how vision, values, and norms are the critical ingredients in any approach to
organizational change related to ethics. Envisioning what is possible and articulating core
values serve as guideposts for making ethical decisions along the way.
Winning through People,addresses company-employee relationships. The topics hereinclude the principles of developing people, promoting health and safety, creating a sense
of balance, and valuing differences. Relating constructively with employees is the starting
point for building an ethical culture. It sets the tone for all relationships.
Winning with Customers, addresses the ethical considerations of customerrelationships. It addresses principles related to product development, manufacturing, and
marketing. The way a company relates to customers not only defines who it is as a
company but also has a major impact on profitability over the long term.
Winning for the Community, discusses ways in which organizations deal with thecommunities in which they are located. The topics here include enhancing the
environment, contributing to community resources, and participating in community
organizations. Socially responsible companies build trust among their constituents and, as
a result, build healthy balance sheets over time.
Action Steps provides action steps for the ethical leader. It suggests strategies fortransforming principles into action. These actions are a measure of the integrity of the
firm. They constitute the day-to-day behaviours that lead investors and stakeholders to
trust the information provided by the firm for them to make their own buying decisions,
employment decisions, regulatory decisions, and investment decisions.
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EMBA - AHMEDABAD UNIVERSITY Malav J. Varu
6Leadership Project: ETHICAL LEADERSHIP
STEP 1 CREATING AN ETHICAL CULTURE
Creating an ethical culture means empowering people to do the
right thing for the company, the customer, and the community.
Principles
1. Creating an ethical culture must begin with a vision that includes employees, customers, and
communities.
2. An ethical culture must be guided by values that anchor the vision.
3. An ethical culture must be supported by norms and policies that influence desired behaviours
in the organizational environment.
Rating Scale for Culture
This scale will help you see where you are and where you want to be.
5.0 Congruence between stated values and operating procedures
4.0 Transference of values to employees, customers, and communities
3.0 Behaviour change supported and modelled by senior management
2.0 Motivational programs to rally support for the vision, values, and norms
1.0 Awareness of stated values
5D PROCESS
This is a process devised to create and ethical culture in an organisation.
Design: Every organization has strengths and weaknesses relative to its articulated values;
therefore, a culture-change effort must begin with a clear statement of the desired end-state: what
we want the culture to look and feel like.
Diagnosis: An accurate diagnosis assesses employee perceptions of the current values and norms
within the organization. For this purpose, two methods are highly useful. Meeting formally and
informally with employees at every organizational level, gathering data through surveys.
8/6/2019 Ethical Leadership Final
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EMBA - AHMEDABAD UNIVERSITY Malav J. Varu
7Leadership Project: ETHICAL LEADERSHIP
Development: Effective and lasting change requires a broad base of leadership skills and
support within the organization. Developing skills and support usually involves a multifaceted
approach to change. This includes further sub-steps like communication, environment, skill
enhancement and planning.
Delivery: Many culture-change efforts fail because they treat diagnosis or development as the
goal line and neglect delivery. It is a highly important stage and, for most organizations, perhaps
the most difficult part of any changes effort. Delivery includes those activities specifically aimed
at increasing commitment, enhancing capacity, and mobilizing support from leaders and
employees.
Determination: This is the final phase of the 5D process and represents a return, or cycling, to
the design and diagnostic phases. Effective change is an ongoing cycle of exploration,
understanding, and action: exploration of where we are leads to an understanding of where we
need to go, and acting on the understanding gets us to the goal line. The important features of
determination are that it builds on what has been accomplished and continues the change
process.
STEP 2 WINNING THROUGH PEOPLE
Winning through People means treating employees as whole persons with unique values,
differences, and needs.
Principles
Winning through People requires a multifaceted approach that includes:
1. Developingemployees in ways that increase their productivity and value.
2.Promotinghealth and safety.
3.Supportinga sense of balance in employees lives.
4. Valuingdifferences.
8/6/2019 Ethical Leadership Final
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EMBA - AHMEDABAD UNIVERSITY Malav J. Varu
8Leadership Project: ETHICAL LEADERSHIP
Rating Scale for Winning through People
The following scale will help you to assess where you are and to set goals for the people-oriented
dimension of your business.
5.0 Movement to an exemplar for winning through people
4.0 Creation of a culture that nurtures personal and professional growth through innovative
performance management, developmental opportunities, succession planning, and the like
3.0 Provision of proactive people programs such as day care, employee assistance, and health
promotion
2.0 Compliance with the law by observing Equal Employment Opportunity (EEO) requirements
1.0 Avoidance of trouble with people, such as avoidance of labour-relations problems.
Other issues to be addressed for attainment of this step are:
I. Employee Development.II. Health and Safety of employees.III. Giving Supporting balance to the employees.
STEP 3 WINNING WITH CUSTOMERS
Winning with Customers means conducting all interactions with the highest levels of integrity
and interdependence.
Principles
Winning with customers is a multidimensional approach that must incorporate these practices:
1. Thinking about customer benefits before product development;
2. Ensuring customer safety when producing/manufacturing products;
3. Relating constructively and honestly with customers while marketing the product;
4. Insisting on fairness toward customers when distributing and servicing the product.
Rating Scale for Winning with Customers
This scale will help you determine where you are and where you want to be.
5.0 Interdependent, grow-grow relationships with customers
4.0 Immersion in the customers business as a partner
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EMBA - AHMEDABAD UNIVERSITY Malav J. Varu
9Leadership Project: ETHICAL LEADERSHIP
3.0 An obsession with customer benefits and win-win relationships
2.0 A passion for customer satisfaction
1.0 An orientation toward customer manipulation
Other issues to be addressed in attainment of this step are:
1. Product Development2. Product Safety3. Public Interest4. Quality Assurance to the customers5. Environment Concern6. Waste Management7. Product Performance and Warranties8. Ethical Selling Practices of Vendors
STEP 4 WINNING FOR THE COMMUNITY
Winning for the Community means taking the initiative to create productive communities that
are able to sustain growth and development.
Principles
A company that wants to do right by its community will . . .
1.Enhance the environment.
2. Contribute generously to community resources.
3.Encourageparticipation in the community.
Rating Scale for Winning for the Community
This scale will help you determine where you are and where you want to be:
5.0 Creating a productive community
4.0 Promoting community growth
3.0 Participating in community organizations
2.0 Protecting community resources
1.0 Meeting minimal regulations
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EMBA - AHMEDABAD UNIVERSITY Malav J. Varu
10Leadership Project: ETHICAL LEADERSHIP
Other issues that play an important part in attainment of this step are:
1. Environment Concern2. Diverting extra resources towards the betterment of the society3. Creating productive communities (NGOs, voluntary organisations etc.)
STEP 5 ACTION STEPS
THE 10 INGREDIENTS OF AN ETHICAL CULTURE
1. A tradition of strong values and ethics
2. A belief at the top in the strategic importance of integrity
3. Leadership modelling and commitment
4. Explicit statements of values and beliefs, such as codes of ethics and standards of business
conduct
5. Active solicitation of support from managers and employees
6. A common view that ethics is a cultural issue
7. Procedures and systems that ensure that ethics is a central part of selection and performance
management
8. Tailored education and training programs
9. Multiple upward and downward communication channels
10. Broad monitoring of ethics goals
PRINCIPALS AND ACTION STEPS
1. A tradition of strong values and ethics: When ethics and values are grounded in tradition,
policies emerge naturally as an outgrowth of the culture.
2. A belief at the top in the strategic importance of integrity: When leaders view integrity as
having strategicimportance, all employees begin to see the business possibilities in creating an
ethical edge.
3. Leadership modelling and commitment. When leadership demonstrates its commitment to
ethics through its own behaviour, employees will get the message that taking the high road will
enhance their careers.
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11Leadership Project: ETHICAL LEADERSHIP
4. Explicit statements of values and beliefs, such as codes of ethics and standards of
business conduct. Whenthere are explicit statements of values and beliefs, employeesare clear
about expectations.
5. Active solicitation of support from managers and employees. When executives actively
solicit the involvementand support of managers and employees, there is joint ownership of the
mission.
6. A common view that ethics is a cultural issue. When ethics is seen as a cultural issue,
people focus on the environment as a potential source of competitive advantage.
7. Tailored education and training programs. When education and training programs are
tailored to the needs of the target population, people are able to apply their skills in creative and
productive ways.
8. Multiple upward and downward communication channels: With such channels, employees
feel informedabout whats going on and free to initiate their ideas forimprovement.
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EMBA - AHMEDABAD UNIVERSITY Malav J. Varu
12Leadership Project: ETHICAL LEADERSHIP
BEST PRACTICES
Based on an extensive review of the literature since 1987, it appears that the best practices for
ethical leadership are the following:
Challenge processes. Encourage the heart. Strive for consistency and congruence. Think long-term. Look at the whole. Tap employees commitment and capacity to learn. Share power. Ensure diversity of voices. Create a humane and nurturing workplace. Build interdependent relationships. Foster community. Accept ownership and accountability. Resist policies of self-interest. Put people and creativity at the center. Be authentic. Engage in constructive collaboration.
Develop stories of integrity. Create a culture of trust.(Source: Ethical Leadership, Richard Bellingham)
Why are these practices so difficult to institutionalize? The simple answer is that we are fighting
history and habits. We live in a culture that values independence and supports an economic
system built on self-interest. These best practices, however, require interdependent thinking and
a focus on community. In many ways, they are countercultural. It is thus no surprise that they are
not the accepted, expected, and rein- forced behaviours in organizational cultures.
Interdependence and community bring us once again to the vital importance of relationship.
Indeed, we may say that building interdependent relationships form s the core of ethical
leadership.
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EMBA - AHMEDABAD UNIVERSITY Malav J. Varu
13Leadership Project: ETHICAL LEADERSHIP
SUMMARY
Ethics is not just another bandwagon:Ethical leadership has one outcome: sustainable
development. We cannot sustain progress if our corporate culture does not support our policies.
We cannot sustain growth if we do not invest in our people, environment and customers.
Ethical leadership does not mean mass confession:It does not involve finding a guiding light
or forming a new business religion. Quite the contrary. Ethical leadership is not interested in lies,
it seeks the truth.
Winning the right way does not cost more than its worth:It can be expensive: For example,
investing in conservation and recycling might require substantial cash outlays in the early stages
because educating people about these things costs money.
Resources are available but require redistribution:Committing funds to clean up past abuses
and to prevent future disasters will require a redistribution of resources.
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EMBA - AHMEDABAD UNIVERSITY Malav J. Varu
14Leadership Project: ETHICAL LEADERSHIP
RESEARCH METHODOLOGY
Primary data has been collected in form of questionnaires. Emotional QuotientTest was created
for the same and circulated among the respondents to mark their responses for the fields. In each
of the organisations one candidate from the higher management has been chosen, whose
details are attached in the annexure. A sample of 20 was chosen for the same, data from three
different organisations has been collected, which are:
1. Larsen & Toubro, Knowledge City, Baroda.2. IOT Anwesha Engineering and Construction Ltd.,3. Jyoti Ltd., Baroda.
COMPANY PROFILES
1. L&T Knowledge City, Baroda.Located at Waghodia, Baroda, 'L&T Knowledge City' extends across a 112-acre campus. The
state-of-the-art engineering campus at Baroda meets the high-end design and engineering
needs of the hydrocarbon and power sectors. In the hydrocarbon space, it caters to the needs
of the upstream, midstream and downstream sectors, and in power, design support for
complete projects. It is a fully owned subsidiary of Larsen & Toubro Ltd.
Manager Surveyed:
Ms. Vandana Nambiar, Manager (HR), heads the employee services wing of the human
resources department, she holds a masters degree in Human Resource Management. She has
been associated with L&T Ltd., for several years in different capacities in the HR
department.
2. IOT Anwesha Engineering and Construction Ltd., Baroda.IOT Anwesha Engineering & Construction Ltd. (IOTAEC) is an ISO9001:2008 approved
company in the field of engineering, construction and manufacturing. It is a subsidiary of
IOT Infrastructure & Energy Services Limited, a joint venture of Indian Oil Corporation
Limited and Oil Tanking GMBH. It has been a leader in mechanical construction with a
niche in fabrication and erection of large storage tanks, pressure vessels, silos etc and has the
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15Leadership Project: ETHICAL LEADERSHIP
requisite engineering, managerial as well as financial capabilities to take on projects of large
size.
In order to meet the growing requirement of its Clients, it has also established a fully
equipped Civil engineering department and has grabbed some major jobs since past two
years.
IOTAEC also has a state of art manufacturing unit at Savli, Baroda to serve the fabrication
needs of its clients in the petroleum, petrochemical, fertilizer, chemical and other various
industries.
Manager Surveyed:
Mr. Mohanraj K. is GeneralManager (Materials), for the Baroda office of IOT AEC, he
has over 25 years of experience in various capacities and disciplines.
3. Jyoti Ltd.Established in 1943, Jyoti Ltd is a leading ISO 9001: 2008 engineering company offering
reliable quality products and services to clients in Water and Power segments in India and in
the international market
Jyoti Ltd. today is serving the vital sectors of national and international economy such as
Power (Thermal, Hydel and Nuclear) generation, Transmission and Distribution.
Agriculture, providing irrigation through pumping systems.
Water supply and sewerage schemes.
Defense-particularly Naval and marine establishments.
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EMBA - AHMEDABAD UNIVERSITY Malav J. Varu
16Leadership Project: ETHICAL LEADERSHIP
Core industries like steel, cement, paper, sugar, fertilizers, chemicals and Petro-chemicals. Railways.
Manager Surveyed:
Lt. Col. A.M. Chinoy, is the Deputy GeneralManager (Administration), he holds vast
experience in the field of administration in various disciplines and capacities.
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EMBA - AHMEDABAD UNIVERSITY Malav J. Varu
17Leadership Project: ETHICAL LEADERSHIP
ETHICAL TEST SURVEY OUTCOMES
A test was conducted for a survey on the sample size of 20. The responses were tapped,
which showed either agreement or disagreement towards a statement and weighed the
statement from a scale of 1 to 10. 10 was rated for the statement if the respondent felt the
statement means to him the most and 1 if its the vice versa.
The outcomes were interesting for the 10 statements which demonstrated a trait towards
being ethical in ones outlook, they are:
Sr. No. Ethical Traits Mean Score
1 Courage to speak the truth 8.0
2 Courage to lead an ethical life 6.2
3 Courage to be involved 7.44 Courage to reject cynicism 6.4
5 Courage to assume responsibility 8.2
6 Courage to lead at home 9.4
7 Courage to persist 6.6
8 Courage to serve 7.4
9 Courage to lead 7.9
10 Courage to follow 8.6
0123456789
10
Mean Score
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18Leadership Project: ETHICAL LEADERSHIP
From the above data it is seen that, courage to lead at home seems to be the most weighed
statement of trait in ethical leadership. This means most respondents feel that their family is the
most important legacy and they want to honour the relationships that come with it.
Courage to follow is the second highest weighed trait which means the respondents feel that
there is nothing wrong in following someone who is their subordinate at the right time, doing sodoes not hurt their ego or their self esteem.
Courage to assume responsibility is the third highest weighed trait which means the
respondents feel that to be an ethical leader one has to assume full responsibility of his own
actions, whether it leads to success or failure.
Courage to speak the truth seems to be the fourth highest weighed trait, this essentially means
that majority of the sample believes that they are willing to listen to unpleasant truths and
truthfulness according to them will drive them more towards being ethical.
Courage to serve, to lead, to be involved have generated average scores, which says the
respondents feel that they matter moderately in being an ethical leader.
Lowest scores have been marked forcourage to persist, to resist cynicism, to lead an ethical
life, the respondents feel that these traits matter the least in being an ethical leader.
MANAGERS TEST OUTCOMES
Sr. No. Ethical Traits Ms. Vandana Mr. Mohanraj LT. Col. Chinoy
1 Courage to speak the truth 9 8 7
2 Courage to lead an ethical life 2 7 9
3 Courage to be involved 10 9 2
4 Courage to reject cynicism 9 7 3
5 Courage to assume responsibility 10 9 6
6 Courage to lead at home 10 9 10
7 Courage to persist 9 8 1
8 Courage to serve 9 9 4
9 Courage to lead 10 9 5
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19Leadership Project: ETHICAL LEADERSHIP
10 Courage to follow 9 9 8
Similar outcomes are seen from the managers responses too. Thus when it comes to being
ethical in ones outlook, the priorities tend to be the same in all groups, whether they are middle
managers or top level managers.
0 2 4 6 8 10 12
Courage to speak the truth
Courage to lead an ethical life
Courage to be involved
Courage to reject cynicism
Courage to assume responsibility
Courage to lead at home
Courage to persist
Courage to serve
Courage to lead
Courage to follow
Lt. Col. Chinoy
Mr. Mohanraj
Ms. Vandana
8/6/2019 Ethical Leadership Final
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EMBA - AHMEDABAD UNIVERSITY Malav J. Varu
20Leadership Project: ETHICAL LEADERSHIP
CONCLUSION AND SUGGESTIONS
From the above literature research and primary data collected we can find that different traits
mean differently to people in the organisation, they essentially mean:
WHAT EACH TRAIT MEANS
1. The courage to seek the truth. I am willing to seek out unpleasant truths, even whenthey may conflict with things I have a great investment in, or when the truth may threaten
my physical, intellectual, or emotional security. I recognize that my personal freedom
depends on my ability to seek and find truth.
2. The courage to lead an ethical life. In a cynical, sometimes dissolute world, I realizethat it takes courage to be ethical. I resist the temptation to be less than ethical, even
when "everyone is doing it." I regard honest people as heroes, not fools.
3. The courage to be involved. Apathy and indifference can be more devastating than anynatural or man-made disasters. Despite occasional compassion fatigue, I remain
committed to making a difference and getting others involved. I refuse to look the other
way.
4. The courage to reject cynicism. Cynicism is a comforting and protective refuge, but oneI resist vigilantly. I know that trust and optimism, essential to a productive life, are
impossible if I give in to the cowardice of cynicism.
5. The courage to assume responsibility. I alone am responsible for my actions, whetherthey lead to success or failure. I refuse to waste time on making excuses, harboring
unrealistic hopes, or placing blame. I am willing to share responsibility and
accountability with others, and back them up 100 % if things go wrong.
6. The courage to lead at home. I know that my home and family are my most powerfullegacy for the future. I mentor my children, giving them equal love and discipline. I'm
there 100 % for my partner. I honor my parents and older relatives, even if advanced age,
ill health, or different values make communication seem difficult and unrewarding. I live
each day with my family and won't think; tomorrow I'll have more time.
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EMBA - AHMEDABAD UNIVERSITY Malav J. Varu
21Leadership Project: ETHICAL LEADERSHIP
7. The courage to persist. I have the courage to delay gratification, to endure the long haul,and to make sacrifices when necessary. I frequently visualize the next few years and
anticipate the results of my actions. I summon the inner resources to stay on track by
keeping my eye on this big picture.
8.
The courage to serve. In an ego-driven, success-driven society, I have the courage to putmyself second. I realize that the loftiest leader is the one who serves others best. My job,
no matter what the description or title, is to provide satisfaction, solve problems, fill
needs, and find answers in a way that enhances and empowers those around me.
9. The courage to lead. Few people are willing to stand for something, or even to clarifywhat they would stand for if they could. Others criticize without offering solutions, but I
concentrate on what I stand for, on solutions and goals, and on how I can motivate others
to action. I'm not content to wait for someone else to take charge and point a direction.
10.The courage to follow. Unlike leaders of image, a leader of substance knows when andhow to follow willingly. I have learned the benefits of being a good follower, of
welcoming the ideas and contributions of others without feeling that my position or
integrity has been challenged. By sharing power, I increase my own personal and
professional power, and make myself aware of the challenges that others face every day.
In todays world a lot of other stuff that goes into making a person successful, but only being
successful in ones career is not enough. Being successful in life is also equally important, and to
do his one has to be ethical in outlook, hence teaching the importance of ethics in personal life
and in business is inevitable.
Regular workshops on work and life ethics will help a lot in terms of moulding the employees of
an organisation into more responsible individuals and fair professionals who will improve the
overall culture of the organisation which will in turn create better opportunities for the
orgnisation.
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22Leadership Project: ETHICAL LEADERSHIP
BIBLIOGRAPHY
Ethical Leadership: Rebuilding Trust in Organisations by RichardBellingham
Ethical Leader by Larry Lashway Beck, Lynn G., and Joseph Murphy. Ethics in Educational Leadership
Programs: An Expanding Role.
Sergiovanni, Thomas J. Moral Leadership: Getting to the Heart of SchoolLeadership.
Starratt, Robert J. "Building an Ethical School: A Theory for Practice inEducational Leadership."