TOPIC 5

Ethics & Values in

Leadership

INTRODUCTORY COMMENT
Leaders can use power (as we discussed in topic)
for good or ill, and the leaders 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 tomorrows 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 DECISIONS
A

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
ones 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 peoples 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
Family
Religion

Peers
Personal
Value
System

Technology

Education
Media

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 (1965-1980s)
The Nexters (1980+)

GENERATIONAL VALUES
The

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 leaders 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 leaders 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

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.
Leaders

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

persons 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 leaderships 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 everyones behavior in
the organization.

Its important that

people know what you
stand for. Its equally
important that they
know what you wont
stand 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.

 The

principle-centered approach
postulates a fundamental
interdependence between the unique
roles of each level:

PRINCIPLE-CENTERED
Personal
Interpersonal
LEADERSHIP
Managerial
(
COVEY
)
Organizational

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

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?