Leadership - Chap 6 - Dubrin

Whisleblowers

A whistleblower is an employee who discloses organizational wrongdoing to parties who can take action. Whistleblowers often go directly to a federal government bureau to report what they consider to be fraud and poor ethics by their employer. The Sarbanes-Oxley Act includes some protection for whistleblowers. Employees who report fraud related to corporate accounting, internal accounting controls, and auditing have a way of gaining reinstatement, as well as back pay and legal expenses. More than half of the pleas of whistleblowers are ignored.

Creating a Pleasant Workplace

Creating a comfortable, pleasant, and intellectually stimulating work environment is a social responsibility initiative that directly affects employees' well-being. Because many people invest about one-third of their time at work, a pleasant work environment increases the chances that their lives will be enriched.

Corporate Social Responsibility

Responsibility of the organization that is part of external engagement, or the efforts a company makes to manage its relationship with the external world. The external engagement should be integrated into decision making at every organizational level. The external engagement should include a wide variety of activities including philanthropy, community programs, aspects of product design, and recruiting policy.

virtuous circle

The relationship between social responsibility and profits can also work in two directions: More profitable firms can better afford to invest in social responsibility initiatives, and these initiatives can lead to more profits. The relationship between social and financial performance may be a virtuous circle, meaning that corporate social performance and corporate financial performance feed and reinforce each other.

Placing Company Interests over Personal Interests

The researchers reason that power can corrupt and absolute power can be an especially toxic influence. Shared leadership can provide a robust system of checks and balances, thereby reducing the possibility of some unethical and criminal behavior by business executives.

Engaging in Social Entrepreneurship

The use of market-based methods to solve social problems. Social entrepreneurship is therefore an entrepreneurial approach to social problems such as homelessness, contaminated drinking water, damaged physical environments, and extreme poverty.

C. Post-Conventional level of moral reasoning

people are guided by an internalized set of universal principles that may even transcend the laws of a particular society. A leader at the post-conventional level of moral behavior would be concerned with doing the most good for the most people, without regard for whether such behavior brought him or her recognition and fortune.

B. Conventional Level of moral reasoning

people learn to conform to the expectations of good behavior as defined by key people in their environment and societal norms. A leader at this level might be moral enough just to look good, such as being fair with salary increases and encouraging contributions to the United Way campaign.

Build Community

A corollary of taking into account the needs of all stakeholders is that the leader helps people achieve a common goal. Leadership researcher Peter Northouse explains that leaders need to take into account their own and their followers' purposes and search for goals that are compatible to all. A business leader who works with many people to help poor schoolchildren is an ideal example of someone who builds a community.

6. Ethical guidance

A leader provides ethical guidance by communicating about ethics, explains ethical rules, and encourages and rewards ethical conduct.

5. Integrity.

A leader with integrity shows a consistency between word and deeds, and keeps promises.

Authentic Leader/Leadership

Authentic leaders have a deep commitment to their personal growth as well as to the growth of other stakeholders. Another behavior of authentic leaders is to perceive their role to include having an ethical responsibility to all of their shareholders. The welfare of others takes precedence over their own personal welfare (as in servant leadership).

Principles and Practices of Ethical and Moral Leadership

Edwin H. Locke, the goal theorist, argues that ethics is at the center of leadership because the goal of a rational leader is to merge the interests of all parties so that everyone benefits and the organization prospers. The ethics link is that if everyone benefits, all people are being treated ethically.

Pay Attention to All Stakeholders

Ethical and moral leaders strive to treat fairly all interested parties affected by their decisions. To do otherwise creates winners and losers after many decisions are made.

Ethical Mind for Leaders

For a leader to stay ethical, he or she must develop an ethical mind, or a point of view that helps the individual aspire to good work that matters to their colleagues, companies, and society in general. Early life influences, such as encouragement not to cheat on exams or plagiarize when writing papers, are a good start. Next, the leader must state his or her ethical beliefs and stick to them.

Providing Training in Ethics and Social Responsibility

Forms of ethics training include messages about ethics and social responsibility from company leadership, classes on ethics at colleges, and exercises in ethics. These training programs reinforce the idea that ethical and socially responsible behavior is both morally right and good for business.

Helping Build a Sustainable Environment

Helping build a sustainable environment can involve hundreds of different actions such as making packaging smaller; making more extensive use of fluorescent lighting; and, when feasible, using energy from solar panels and wind turbines to replace burning of fossil fuels. In addition to gaining favorable publicity for the company, the environment benefits from the type of initiatives just described. Another way for a leader to help the environment is to be in the recycling business.

Working with Suppliers to Improve Working Conditions

Instead of refusing to deal with a supplier who operates a sweatshop, management might work with the supplier to improve plant working conditions. The justification for helping the supplier improve conditions is that the supplier's employees are often in dire need of a paying job.

Establishing Written Codes of Ethical Conduct

Many organizations use written codes of conduct as guidelines for ethical and socially responsible behavior. Regardless of the industry, most codes deal with quite similar issues. The Sarbanes-Oxley Act, triggered by the financial scandals around the year 2000, requires public companies to disclose whether they have adopted a code of ethics for senior financial officers.

2. Greed, gluttony and avarice

Many people seek to maximize personal returns, even at the expense of others. Exceptionally high executive compensation could be interpreted as signs of greed and avarice.

A leader interested in maximizing shareholder wealth

Might attempt to cut costs and increase profits in such ways as (1)laying off valuable employees to reduce payroll costs, (2)overstating profits to impress investors, (3)overcharging customers, and (4)reducing health benefits for retirees. Although these practices may be standard, they all violate the rights of stakeholders.

3. Rationalization and implied permission

One reason is rationalization, which leads people to focus on the intent of the action rather than on the action itself. A reason is implied permission—"Nobody is telling me to stop, so it must be OK."For example, managers might continue to place only personal friends and relatives in key jobs because they were not told to stop.

Guidelines for Evaluating the Ethics of a Decision

The Center for Business Ethics at Bentley College has developed six questions to evaluate the ethics of a specific decision: Is it right? is it fair? who gets hurt? Would you be comfortable if the details of your decision or actions were made public in the media or through e-mail? What would you tell your child, sibling, or young relative to do? How does it smell?

1. Fairness.

The leader who practices fairness avoids favoritism, treats others in a manner that is right and equal, and makes principled choices.

2. Power sharing.

The leader who shares power allows for group member input into decisions and listens to their suggestions, ideas, and concerns.

4. People orientation.

The leader with people orientation cares about, respects, and supports followers.

Be Honest and Trustworthy and Have Integrity in Dealing with Others

The problem is that ethical problems erode the trust of both leaders and organizations. Despite the importance of leaders who are trustworthy, evidence suggests that business firms have many ethical problems. An ethical leader is honest and trustworthy and therefore has integrity. According to ethics researcher Thomas E. Becker, this quality goes beyond honesty and conscientiousness.

1. Leader moral identity

a leader's moral identity has a major influence on his or her level of ethical behavior. A moral identity involves a self-perception organized around a set of moral traits such as honesty, caring, and compassion. Leaders set the ethical tone of an organization and are instrumental in encouraging ethical behavior among subordinates

A. Preconventional level of moral reasoning

a person is concerned primarily with receiving external rewards and avoiding punishment. A leader at this level of development might falsify earnings statements for the primary purpose of gaining a large bonus.

Morals

an individual's determination of what is right or wrong; morals are influenced by a person's values. Values are tied closely to ethics because ethics become the vehicle for converting values into action.

8. Motivated Blindness

or seeing what we want to see and missing contradictory information. The result can be a conflict of interest, such as a compensation consultant being paid by the CEO to make recommendations about her financial compensation. example of motivated blindness is that a manager who hires an individual may not notice the new hire's unethical behavior because the behavior would reflect an error in selecting the new hire

Ethics

study of moral obligations, or of separating right from wrong. Ethics can also mean the accepted guidelines of behavior for groups or institutions. A leader who values fairness will evaluate group members on the basis of their performance, not personal friendships.

7. Concern for sustainability.

A leader with a true concern for sustainability cares about the environment in such ways as being a champion of recycling.

4. Moral development level

A notable contributor to a leader's ethics and morality is his or her level of moral development. Some leaders are morally advanced, whereas others are morally challenged. People progress through three developmental levels in their moral reasoning A. Preconventional level B. Conventional Level C.

7. Character of the person

A person's character contributes heavily to ethical differences. The higher the quality of a person's character, the more likely he or she will behave ethically and morally. For example, a leader who is honest and cooperative will tend to behave more ethically than a leader who is dishonest and uncooperative.

Engaging in Philanthropy

A standard organizational leadership approach to social responsibility is to donate money to charity and various other causes. Most charities are heavily dependent on corporate support. Colleges, universities, and career schools also benefit from corporate donations.

6. Situational influences

Unethical and immoral leadership behavior can also be influenced by the situation, particularly the organizational culture. If leaders at the top of the organization take imprudent, quasi-legal risks, other leaders throughout the firm might be prompted to behave similarly.

Four Ethical Leadership Behaviors

1. Be Honest and Trustworthy and Have Integrity in Dealing with Others 2.Pay Attention to All Stakeholders 3. Build Community 4. Respect the Individual

Dimensions of ethical leadership behavior

1. Fairness. 2. Power sharing. 3. Role clarification. 4. People orientation. 5. Integrity. 6. Ethical guidance. 7. Concern for sustainability.

Factors Contributing to Ethical Differences

1. Leader moral identity 2. Greed, gluttony and avarice 3. Rationalization and implied permission 4. Moral development level 5. Sense of entitlement 6. Situational influences 7. Character of the person 8. Motivated Blindness

A Sampling of Unethical Leadership Behaviors

A statement often made is that about 95 percent of business leaders are ethical and that the 5 percent of bad apples (mostly senior executives) get all the publicity. However, the impact of unethical leadership has been enormous. Unethical behavior has thrown companies into bankruptcy, led to the layoffs of thousands of workers, diminished trust in stock investments, and discouraged many talented young people from embarking on a business career.

Ethical and Socially Responsible Behavior and Organizational Performance

High ethics and social responsibility are sometimes related to good financial performance. A model of the relationship between corporate social performance and profits emphasizes the role of supply and demand. An example might be that investing in programs to improve literacy among poor children might have a payoff because there is a big demand for this type of investment.

Entitlement

In relation to unethical behavior by executives, the idea that some CEOs lose their sense of reality and feel entitled to whatever they can get away with or steal. Many executives feel entitled to extraordinary compensation. The average CEO pay at major corporations for Standards & Poor's 500 corporations is 204 times that of the average rank-and-file worker; the average of the top 100 companies is 495.

Developing Formal Mechanisms for Dealing with Ethical Problems

Large organizations frequently establish ethics committees to help ensure ethical and socially responsible behavior. Top-level leadership participation in these formal mechanisms gives them more clout. Committee members include a top management representative, plus other managers throughout the organization. An ethics and social responsibility specialist from the human resources department might also join the group.

Respect the Individual

Respecting individuals is a principle of ethical and moral leadership that incorporates other aspects of morality. If you tell the truth, you respect others well enough to be honest. If you keep promises, you also show respect. And if you treat others fairly, you show respect.

5. Sense of entitlement

The moral excesses of business leaders can occur because many of them have developed a sense of entitlement.

Providing Strategic Leadership of Ethics and Social Responsibility

The most effective route to an ethical and socially responsible organization is for senior management to provide strategic leadership in that direction. Strategic leadership of ethics and social responsibility includes leading by example. If workers throughout the firm believe that behaving ethically is in and behaving unethically is out, ethical behavior will prevail.

3. Role clarification.

To give group members more structure in their work, the leader clarifies responsibilities, expectations, and performance goals.

Integrity

refers to loyalty to rational principles; it means practicing what one preaches regardless of emotional or social pressure. or example, a leader with integrity would believe that employees should be treated fairly, and the pressure to cut costs would not prompt him or her to renege on a commitment to reimburse an employee for relocation expenses.