MHR 4020 CH. 6

Authentic leaders

(Aspect of paying attention to all stakeholders ethical leadership behaviors), Another behavior of ______ 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). They have deep commitment to their personal growth as well as to the growth of other stakeholders.

-performance, not personal friendships -good ethics

-A leader who values fairness will evaluate group members on the basis of their... -and a moral leader will practice...

-get all the publicity -unethical behavior

-A statement often made is that about 95% of business leaders are ethical and that the 5% of bad apples who are mostly senior executives ____________However, the impact of unethical leadership has been enormous. -_____________ 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.

All people are being treated equally

Edwin A 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....

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

Factors contributing to ethical differences among leaders are 1.) This involves a self-perception organized around a set of moral traits such as honesty, caring, and compassion. It acts as a self-regulatory mechanism rooted in a person's sense of what is right and wrong. 2.) Many people seek to maximize personal returns, even at the expense of others 3.) People choose the wrong path because of rationalization which leads people to focus on the intent of the action rather than on the action itself. Also implied permission for example "nobody is telling me to stop, so it must be OK" 4.) Some leaders are morally advanced, whereas others are morally challenged-a mental condition that often develops early in life. 5.) The moral excesses of business leaders can occur because many of them have developed a sense of entitlement 6.) 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 7.) This contributes heavily to ethical differences. The higher the quality of a person's character, the more likely he or she will behave ethically or morally. 8.) 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.

-Is it right? -Is it fair? -Who gets hurt? -Would you be comfortable if the details of your decisions or actions were made public in the media or through email? -What would you tell your child, sibling, or young relative to do? -How does it smell? (based on a person's intuition and common sense)

Guidelines for evaluating the ethics of a decision

corporate social responsibility

One new framework is that such responsibility 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 organization level. The external engagement should include a wide variety of activities including philanthropy, community programs, aspects of product design and recruiting policy. (Being socially responsible fits into the Thou Shalt approach, or finding out better ways for leaders to make a positive contribution to society. When corporate social responsibility generates value for shareholders and stakeholders, it is regarded as good business strategy.)

-pre-conventional level -conventional level -post-conventional level

Part of Moral developmental level, People progress through three developmental levels in their 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) - 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) -people are guided by an internalized set of universal principles that may transcend the laws of a particular society (A leader at this level would be concerned with doing the most good for the people, without regard for whether such behavior brought him or her recognition and fortune, a servant leader would fit into this category)

(1) layoff valuable employees to reduce payroll costs (2) overstating profits to impress investors (3) overcharging customers (4) reducing health benefits for retirees

Part of the "pay attention to all stakeholders" part of the ethical leadership behavior, A leader interested in maximizing shareholder wealth might attempt to cut costs and increase profits in such ways as: (Although these practices may be standard, they violate the rights of stakeholders):

1. create a pleasant work environment 2. engage in social entrepreneurship (create a vision) 3. engage in philanthropy (charitable organization)

Relevant to corporate social responsibility, some socially responsible actions include

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

Researchers identified 5 dimensions of ethical leadership behavior: 1. The leader who practices this avoids favoritism treats others in a manner that is right and equal and makes principled choices 2. The leader who practices this allows group member input into decisions and listens to their suggestions, ideas, and concerns 3. To give group members more structure in their work, the leader clarifies responsibilities, expectations and performance goals 4. The leader with this cares about, respects and supports followers 5. A leader with this shows consistency between word and deeds and keeps promises 6. A leader that provides this by communicating about ethics, explains ethical rules and encourages and rewards ethical conduct 7. A leader with a true concern for sustainability cares about the environment in such ways as being a champion of recycling

-(Employees are better motivated and lead to better performance)employees in an ethical environment are better motivated and lead to better performance -(Avoid huge fines from unethical behavior) being ethical helps avoid the costs of paying huge fines for being unethical -(attract high-quality employees) Ethical environments tend to attract high-quality employees -(employees are more emotionally committed to the company) Employees that perceive their employers that have high corporate social responsibility tend to be more emotionally committed to the company -(Company saves or earn more money, but sometimes eats into profits) Overall, Socially responsible behavior can tend to earn or save the company a lot of money, but there are times where being socially responsible can eat into profits

Some benefits for ethical and socially responsible behavior leads to better organizational performance in:

1. Providing strategic leadership of social responsibility and ethics (includes leading by example) 2. Create a pleasant workplace 3. Help build a sustainable environment (such as managing toxic waste) 4. Engage in social entrepreneurship 5. Engage in philanthropy 6. Work with suppliers to improve working conditions 7. Establish written codes of ethical conduct 8. Develop formal mechanisms for dealing with ethical problems (establishing ethical committees, like establishing policies and reviewing complaints about ethical problems) 9. Accept whistleblowers 10. Provide training in ethics and social responsibility 11. Place company interests over personal interests

Some factors or actions in socially responsible and ethical organization are:

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

The four ethical leadership behaviors are: 1.) The problem is that ethical problems erode the trust of both leaders and organizations. When an ethical leader is honest and trustworthy, they have integrity 2.) Ethical and moral leaders strive to treat fairly all interested parties affected by their decisions. To do otherwise creates winners and loser after many decisions are made 3.) A corollary of taking into account the needs of all stakeholders is that the leader helps people achieve a common goal. The researcher explains that leaders need to take into account of their own and their follower's purposes and search for goals that are compatible to all. 4.) if you tell the truth, you respect others well enough, to be honest. if you keep promises you also show respect. If you treat others fairly, you show respect. Showing respect for the individual also means that you recognize that everybody has some inner worth and should be treated with courtesy and kindness

virtuous circle

The relationship between social responsibility and profits can also work in 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 ______________meaning that corporate social performance and corporate financial performance feed and reinforce each other

Whistleblower

an employee who discloses organizational wrongdoing to parties who can take action. They can often go directly to a federal government bureau to report what they consider to be fraud and poor ethics by their employer

ethical mind

point of view that helps the individual aspire to good work that matters to their colleagues, companies and society in general. Developing this begins with the belief that retaining an ethical compass is essential to the health of the organization. (To stay ethical, the leader should act quickly on strongly unethical behavior of others, such as confronting to a colleague who is using the corporate jet for a family vacation. We never know, however, when a business leader with an outstanding reputation for ethical behavior will have a moral lapse at some point.

Integrity

refers to loyalty to rational principles; it means practicing what one preaches regardless of emotional or social pressure (for example, a leader with this 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)

ethics

the study of moral obligations or of separating right from wrong. It can be a plural noun meaning the accepted guidelines of behavior for groups or institutions (values are closely tied to this because it becomes the vehicle for converting values such as fairness and integrity into action)

social entrepreneurship

the use of market based methods to solve social problems. This is therefore an entrepreneurial approach to social problems (such as homelessness, contaminated drinking water, damaged physical environments and extreme poverty)

morals

which are an individual's determination of right and wrong in which are influenced by a persons values.