TOPIC 5

Ethics & Values in Leadership

INTRODUCTORY COMMENT

Leaders can use power (as we discussed in topic) 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

Ethics Rules 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 LEADERSHIP

General Conceptions of Ethical Leadership Diverse Perspectives on Ethical Leadership

Burns Heifetz Greenleaf

ETHICAL LEADERSHIP

Personal Integrity and Ethical Leadership Dilemmas in Evaluating Ethical Leadership

Influencing Expectations Influencing Values and Beliefs Multiple Stakeholders

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 DECISIONSA 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?

THE RELATIVE IMPORTANCE PEOPLE PLACE ON VALUES (ROKEACH)

Terminal Values Instrumental Values

An exciting life Being courageous

A sense of accomplishment Being helpful

Family security Being honest

Inner harmony Being imaginative

Social recognition Being logical

Friendship Being responsible

SOME INFLUENCES ON THE DEVELOPMENT OF PERSONAL VALUES

Personal Value

System

Family

Media

Technology

Religion

Education

Peers

FOUR GENERATIONS OF WORKERS The 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 (pre 1943) The Baby Boomers (1946-1964) The Xers (1965-1980’s) The Nexters (1980+)

GENERATIONAL VALUESThe results of a scientific sampling

of over 1,000 people living in the U.S. 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 LEADERSHIP Values 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 LEADERSHIP

Leaders 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 Development Organized 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 REASONING

Preconventional 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 CONTINUED

Conventional 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. VALUES Organizational 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

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.

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 justification Euphemistic labeling Advantageous comparison Displacement of responsibility

HOW GOOD PEOPLE JUSTIFY DOING BAD THINGS, CONTINUED

Diffusion of responsibility Disregard or distortion of consequences Dehumanization Attribution 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.

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?