MAN3065 Chapter 11 Ethical Leadership

Leader-exchange theory

- When leaders form unique relationships with followers through social interactions

Nonverbal communication

-Actions, body language, expressions, or other forms of communication not written or oral -Provides major clues about an individual's emotional state -Paralanguage - the way we talk, such as volume, inflection, tone, and rhythm -Often deemed more reliable than verbal communication

Compromising

-Believe each side should give something up in order to gain something of value •Uselul in resolving ethical dilemmas when all solutions have disadvantages

Reward power -

A person's ability to influence the behavior of others by offering them something desirable

Ethics programs and communication

Codes of ethics Interpersonal communication

Management styles

Competing Avoiding Accommodating Compromising Collaborating

Expert power -

Derived from a person's knowledge and usually stems from a superior's credibility with subordinates

Ethical Leadership Communication Skills

Interpersonal communication Small group communication

Leader-follower congruence

When leaders and followers share the same vision, ethical expectations, and objectives for the company

Ethical business conflicts -

When there are two or more positions on a decision that conflicts with organizational goals -Sometimes emerge because employees feel uncomfortable about their own or their coworkers' decisions -Helps pinpoint ethical issues

An individual's career stage, age, organization size, and geographic location

affect the relative priority given to satisfying respect, self-esteem, and basic physiological needs. -

Power differences

and workplace politics Attempt to reduce differences when ethical communication is involved

An ethical leader

must know which style of conflict management to apply to a particular issue.

Ethical leadership is not

possible without effective communication.

Group polarization

refers to the fact that a group is more likely to move toward a more extreme position than its individual group members.

Disagreement exists between company leaders and employees

regarding how this process is implemented. •Ethical leadership training for both managers and employees is helpful. •

There are (3)six? leadership styles based on emotional intelligence:

-Transactional leaders -Transformational leaders - -Authentic leaders

Ethical Leader Habits

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 the 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.

Motivation -

A force within the individual that focuses their behavior toward achieving a goal

Job performance -

A function of ability and motivation and can be represented by the equation (job performance = ability times motivation)

Coercive power -

Penalizes actions or behavior Advantages Quickness of results Disadvantages Lowers job satisfaction

Ethical leaders must...

-Model organizational values -Place what is best for the organization over their own interests -Train and develop employees throughout their careers -Establish reporting mechanisms -Understand employee values and perceptions -Recognize the limits of organizational rules and values -Not operate in a silo of decision making -Be passionate about the organization -Have strong personal character -Not wait for ethical problems to arise

Avoiding Groupthink

-Understand groupthink and how it can occur. -Allow open and honest discussions that encourage critiques, questioning, and criticism. -Criticism should be welcomed and not minimized or dismissed. -Explore all sides of a topic. -Bring in the appropriate subject matter experts (internally or externally). -Document the situation, options, recommendations, implementation timetable, needed support, and budget. -Have another team review your output.

Listening

Involves paying attention to both verbal and nonverbal behavior Just as important as speaking Important to employee morale

Transactional leaders -

Leaders who create employee satisfaction through negotiating, or "bartering," for desired behaviors or levels of performance

Feedback

Positive/negative via formal/informal methods Important in making employees feel involved

RADAR Model

Recognize ethical issues Avoid misconduct whenever possible Discover ethical risk areas Answer stakeholder concerns when an ethical issue comes to light Recover from a misconduct disaster by improving upon weaknesses in the ethics program

Emotional intelligence -

The ability to manage themselves and their relationships with others effectively, characterized by self-awareness, self-control, and relationship building

Legitimate power -

The belief that a certain person has the right to exert influence and certain others have an obligation to accept it Advantages: Helps ensure employee

Ethical leaders should

also have the ability to identify the conflict management styles of others. •

Leaders cannot totally avoid ethical conflict

but can maintain an ethical corporate culture through appropriate conflict management. -Ethical conflict issues will not be brought to management's attention without effective mechanisms for transparent communication. -Requires an authentic, proactive approach. •Employees should be trained to handle conflict.

Empowerment

is an essential component of a values-based organizational culture. -Encourages employees to express concerns, bring up ethical issues, and take a proactive approach toward resolving conflicts •

The status and power of leaders

is directly correlated to the amount of pressure they exert on employees to get them to conform to expectations.

Groupthink occurs

when one or more group members feel pressured to conform to the group's decision even if they personally disagree.

Individuals have power over others

when their presence causes others to behave differently. •

Reporting

Two-way process-both employee and leader feel a responsibility to report to one's subordinates Process can be formal or informal

Ethical Leader

•Includes ethics at every operational level •Addresses issues as soon as they appear •Tries to create participative organizational cultures •Views employee collaboration as an important resource

Transformational leaders - -

Leaders who strive to raise employees' level of commitment and foster trust and motivation

Ethical disasters -

Large-scale unethical activity that follows recognizable phases of escalation, from ethical issue recognition and the decision to act unethically to the organization's discovery of and response to the act.

Authentic leaders

Leaders who 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

Normative myopia -

When managers overlook or stifle the importance of core values in their business decisions -Believe normative values do not apply to managerial decisions. -Facts/values can be separated in decision making. -Normative values are outside the realm of business. •Result: Ethical blindness—propensity to rationalize an unethical action or turn a blind eye

Organizational members engaging in questionable or illegal conduct

are guilty of ethical misconduct. -Can threaten the overall integrity of the organization •Formal mechanisms should be in place to discover risk.

Effective leaders can use different styles

depending upon the situation.

Ethical leadership skills

develop through years of training, experience, and learning other best practices of leadership.

Organizational culture

emerges whether or not there is effective leadership.

Ethical leaders must empower

employees to make ethical decisions and take responsibility for their conduct. •

An integrity-based approach views

ethics as an opportunity to implement core values.

Companies should prepare

for ethical disasters. -Can result in substantial legal and financial costs and disrupt routine operations, paralyze employees, reduce productivity, destroy organizational reputation, and erode stakeholder confidence •

Leaders take responsibility

for the firm's ethical culture and hold employees accountable -Usually have chief officers, human resource managers, and board member committees involved with ethics and compliance -Empowers employees -Can help the firm understand where questionable practices are occurring and where possible new ethical issues are arising

Employee empowerment

is important in creating employee-centered ethical leadership.

Leadership -

The ability or authority to guide and direct others toward a goal

Ethical leaders need...

-Good character -Competence -Skills to guide others o

Acomodating

-Highly cooperative -Give in to the other side even it means sacrificing their own interests and values

Transparency

Develops a culture where ethics is frequently discussed

Small group communication

Many of an organization's ethical decisions are made in teams. Small groups can increase collaboration and generate a variety of perspectives and opinions.

There are five power bases from which one person may influence another:

Reward Power Coercive power Legitimate power Expert Power Referent Power

Growth needs -

Satisfied by creative or productive activities

Relatedness needs -

Satisfied by social and interpersonal relationships -

An organization offers positive incentives

that encourage employees to work toward organizational objectives. -

Interpersonal communication

two or more people interact with one another An ethical method of communicating treats the other person with respect. It is often difficult to communicate with superiors; communication has gray areas.

Ethical decisions are one dimension of leadership.

•Can create an ethical culture •Power to motivate/enforce norms, policies, viewpoints •Influence corporate culture and ethical posture •Not simply allowing employees to follow their own moral codes •Assume responsibility to model ethical conduct for employees •A firm's board of directors is also an important leadership component

Apathetic Leader

•Cares little for ethics •Views ethics as relative/optional in a business context •Often displays no passion for firm/mission of the organization •Employees don't see sacrifices in them that other managers or leaders display

Benefits of Ethical Leadership

•Direct positive impact on corporate culture •Higher employee satisfaction and commitment •Strong relationships with external stakeholders •Strong impact on long-term market firm valuation -Positive association between ethical commitment of employees and a firm's valuation on the stock market •More likely to see government fines reduced if misconduct occurs •Can create significant competitive advantages/value for company

Competing

•High ssserlive and nol very copperalive Believe in winnng at any cost •Measure success by how much the other side loses •Usualy not considered to be ethical •Abusive and less likely to consider the concerns of stakeholders

Collaborating

•Most advantageous •Copperalive and asserlie -Collaborate with others to find way to obtain a beneficial solution

Avoiding

•Not effective, avoid conflict at any cost even if it leads to misconduct •Uncooperative and non-assertive •Even if they are aware of misconduct, they nave no desire to manage it

Power

•Power refers to the influence leaders and managers have over the behavior and decisions of subordinates.

Unethical Leader

•Usually egocentric •Does whatever it takes to achieve personal and organizational objectives •Looks at minimum guidelines and searches for legal loopholes •Perceives ethics codes, compliance regulations, and industry standards as optional •Justification for breaking laws: Serves a greater good; risk of getting caught is low