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  1. RMIT Classification: Trusted INTRODUCTION You will examine important issues about leadership ethics and social responsibility. The focus is on leaders rather than on a general treatment of business ethics. This week aims to identify key principles of ethical and moral leadership and apply a guide to ethical decision making. You will examine what leaders can do to foster an ethical and socially responsible organisation and investigate the link between business ethics and organisational performance.
  2. RMIT Classification: Trusted Learning Objectives • specify key principles of ethical and moral leadership. • apply a guide to ethical decision making • present representative examples of unethical behaviour by business leaders • describe what leaders can do to foster an ethical and socially responsible organization • explain the link between business ethics and organisational performance.
  3. RMIT Classification: Trusted • Followers see leaders as role models, and could interpret and emulate their actions. • If leaders encourage or overlook unethical behaviour in the workplace, their followers are likely to engage in similar behaviour. • Leaders’ unethical actions could give rise to legal action against the company. • The unethical practices of leaders could threaten the survival of the firm and threaten the job security of followers. ETHICS AND LEADERSHIP Quan Trọng
  4. RMIT Classification: Trusted RMIT University© School of Management 4 • BOEING KNEW OF PROBLEMS WITH 737 MAX: us/boeing-737-max-disagree- alert/index.html
  5. RMIT Classification: Trusted
  6. RMIT Classification: Trusted 6 • Ethics is the study of moral obligations, or of separating right from wrong – Ethics can also mean the accepted guidelines of behavior for groups or institutions • Morals are an individual’s determination of what is right or wrong and are influenced by an individual’s values ETHICS AND MORALS Quan Trọng
  7. RMIT Classification: Trusted •Ethics is central to the leadership process: The process of influence The need to engage followers to accomplish mutual goals The impact leaders have on establishing the organisation’s values Research has linked perceived leader effectiveness with perceptions of the leader's honesty, integrity, and trustworthiness (Den ETHICS AND LEADERSHIP
  8. RMIT Classification: Trusted Slide 8 Ethical leadership: “the demonstration of normatively appropriate conduct through personal actions and interpersonal relationships, and the promotion of such conduct to followers through two-way communication, reinforcement, and decision-making” (Brown et al., 2005: 120). Ethical leaders have been characterised ETHICAL LEADERSHIP Brown, ME, & Treviño, LK 2006, Ethical leadership: A review and future directions, The Leadership Quarterly, 17 (6), 595-616.
  9. RMIT Classification: Trusted 9 • Individual factors • Situational factors FACTORS INFLUENCING ETHICAL LEADERSHIP BEHAVIOUR
  10. RMIT Classification: Trusted INDIVIDUAL FACTORS • A leader can make decisions based on various individual factors such as religion, values, family and cultural background, personality, gender and age. • Individual leaders’ goodness or moral character influence their ethical behaviour. The characteristics that demonstrate goodness include humanity, honesty, justice, respect for human dignity and rights • Demographic factors like gender and age have also been found to affect leaders’ ethical outcomes. • There is debate about whether men or women make better ethical leaders. Some studies have shown that females exhibit higher levels of ethical behaviour, as they tend to consider societal, corporate and environmental ethics more important than do men. • Some researchers have proposed the superior caring nature of women could mean that they would be better ethical leaders in our workplaces. • There is a view that with age, leaders tend to become more ethical and less concerned with material growth than with their own personal growth.
  11. RMIT Classification: Trusted SITUATIONAL FACTORS • A large body of literature suggests that organisational factors, such as an organisation’s ethical values, can influence a leader’s ethical decision-making. • For example, organisational culture have been found to promote value-based practices and professional integrity in the Army. • Social context and other cultural influences can also affect leaders’ ethical behaviour. • Performance pressures common in a given culture, such as the importance of meeting quality and quantity standards, time deadlines and the attitude of “win at all costs”, have been found to lead to unethical decisions. • Culturally based aspects such as how the leader handles interpersonal conflict, the leader’s decision-making autonomy, the type of ethical issue at hand, and how the leader is expected to respond to others’ level of authority in interactions affect the quality of ethical decisions.
  12. RMIT Classification: Trusted • Personality Traits and Attitudes – Ethical behavior is related to individual needs and personality traits – To gain power, people may be unethical – Irresponsible persons may unethically cut corners – Self-confidence can allow a person to make ethical choices FACTORS INFLUENCING ETHICAL BEHAVIOUR
  13. RMIT Classification: Trusted • Unethical behavior is more likely found in irresponsible people who are: • Emotionally unstable • External locus of control • Being ethical is part of integrity • People with positive attitudes about ethics tend to be ethical FACTORS INFLUENCING UNETHICAL BEHAVIOUR
  14. RMIT Classification: Trusted 14 • Is it right? • Is it fair? • Who gets hurt? • Would you be comfortable if the details of your decision or actions were made public? • What would you tell your child, sibling, or young relatives to do? • What does your intuition tell you? EVALUATING ETHICS OF A DECISION GUIDELINES
  15. RMIT Classification: Trusted 15 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 5. Accomplish silent victories
  16. RMIT Classification: Trusted Characteristics of Ethical Leader • Ethical leaders are honest with employees, partners, customers, vendors, and shareholders. • They always honor their agreements or commitments to others. • Ethical leaders also treat people fairly, by promoting people based on people results/performance. • Ethical leaders do not take all the credit for successes and they do not blame others when things go wrong. • Ethical leaders usually allow others to participate in decision making, and generally treat people with respect. • Ethical leaders usually treat people as individuals or help followers to develop their own potential. • Ethical leaders want to serve others and focus on others’ personal needs and goals.
  17. RMIT Classification: Trusted Respects Others • Leader shall: – Treat other people’s values and decisions with respect – Allow others to be themselves with creative wants and desires – Approach others with a sense of unconditional worth and value individual differences  Leader behaviors: - Listens closely to subordinates - Is empathic - Is tolerant of opposing Treating others as ends (their own goals) rather than as means (to leaders’ personal goals) PRINCIPLES OF ETHICAL LEADERSHIP Sage 2010
  18. RMIT Classification: Trusted Leaders: – Are not deceptive – Tell the truth with a balance of openness and candor while monitoring what is appropriate to disclose in a particular situation Honest leaders are authentic but also sensitive to the feelings and attitudes of others  Leader behaviors – Don’t promise what you can’t deliver – Don’t suppress obligations – Don’t evade accountability – Don’t accept “survival of the fittest” pressures – Acknowledge and reward honest behavior in the organisation Manifests Honesty PRINCIPLES OF ETHICAL LEADERSHIP
  19. RMIT Classification: Trusted Slide 19 Ethical leaders are thought to be honest and trustworthy. Ethical leaders are seen as fair and principled decision-makers who care about people and the broader society, and who behave ethically in their personal and professional lives. This represents observers' perceptions of the leader's personal traits, character, MORAL PERSON Brown, ME, & Treviño, LK 2006, Ethical leadership: A review and future directions, The Leadership Quarterly, 17 (6), 595-616.
  20. RMIT Classification: Trusted Slide 20 Moral managers make ethics an explicit part of their leadership agenda by communicating an ethics and values message, visibly and intentionally role modelling ethical behaviour, using the reward system (rewards and MORAL MANAGER Brown, ME, & Treviño, LK 2006, Ethical leadership: A review and future directions, The Leadership Quarterly, 17 (6), 595-616.
  21. RMIT Classification: Trusted 21 Comparing Unethical Versus Ethical Leadership
  22. RMIT Classification: Trusted Why do leaders behave unethically? • Personality characteristics such as greed (not utilitarian) • Poor morals and values (lack of moral imperatives or lack of an ethics of justice) • Lack of consideration for others (no duty of care) • Think they won’t get caught (poor governance) • Organisation culture (i.e. pressure to meet targets) 22
  23. RMIT Classification: Trusted • People are more likely to act unethically: – In highly competitive situations – In unsupervised situations – When there is no formal ethics policy – When unethical behavior is not punished or is rewarded THE SITUATIONAL ASPECT OF ETHICS
  24. RMIT Classification: Trusted so why is it so difficult to be ethical? because what is ethical is not always clear 24 QUESTION
  25. RMIT Classification: Trusted 25 • To remain ethical, leaders need to develop an ethical mindset, or point of view • Leader’s need to state this viewpoint and apply it rigorously, using self-checks along the way • Leader’s must act quickly and publicly on lapses of ethical behavior of others • The ethical mind of the leader is essential for the overall health of the organization THE ETHICAL MIND FOR LEADERS
  26. RMIT Classification: Trusted 26 • Having obligations to society beyond the company’s economic obligations to owners or stockholders and also beyond those prescribed by law or contract • Relates to an organization’s impact on society and goes beyond doing what is ethical SOCIAL RESPONSIBILITY
  27. RMIT Classification: Trusted 27 • Creating a pleasant workplace • Guarding the environment • Engaging in philanthropy • Working with suppliers to improve working conditions SOCIALLY RESPONSIBLE ACTIONS
  28. RMIT Classification: Trusted 28 • Providing strategic leadership of ethics and social responsibility • Establishing written codes of ethical conduct • Developing formal mechanisms for dealing with ethical problems • Accepting whistleblowers • Providing training in ethics and social responsibility • Placing company interests over personal interests CREATING AN ETHICAL AND SOCIALLY RESPONSIBLE CULTURE
  29. RMIT Classification: Trusted 1. Develop, articulate, and uphold high moral principles. 2. Focus on what is right for the organization and society as well as all the people involved. 3. Set the example you want others to live by. 4. Be honest with yourself and others. 5. Drive out fear and eliminate undiscussables. 6. Establish and communicate ethics policies. 7. Develop a backbone – show zero tolerance for ethical violations. 8. Reward ethical conduct. 9. Treat everyone with fairness, dignity, and respect, from the lowest to the highest level of the organization. 10.Do the right thing in both your private and professional life – even when no one is looking. 2 9 HOW TO ACT ETHICALLY AS A LEADER
  30. RMIT Classification: Trusted 30 • High ethics and social responsibility are related to good financial performance • The relationship between social responsibility and financial performance may be a virtuous circle. • Corporate social responsibility and corporate financial performance may feed and reinforce each other ETHICS AND PERFORMANCE
  31. RMIT Classification: Trusted Fig. 1. Summary of propositions. Brown, ME, & Treviño, LK 2006, Ethical leadership: A review and future directions, The Leadership Quarterly, 17 (6), 595-616. ETHICAL LEADERSHIP: INFLUENCERS AND OUTCOMES
  32. RMIT Classification: Trusted 32 • Key principles of ethical leadership include having honesty and integrity, paying attention to all stakeholders, building community, respecting the individual, and accomplishing silent victories SUMMARY
  33. RMIT Classification: Trusted © 2010 Cenage Learning. All 33 • Examples of factors contributing to how one person’s ethics differ from another include: the person’s level of greed, gluttony, and avarice, the person’s level of moral development, the person’s sense of entitlement, the situation itself, combined with the corporate culture, and/or the person’s character. SUMMARY CTD
  34. RMIT Classification: Trusted 34 • A leader or manager should seek answers to a series of important questions before reaching a decision about an issue that is not clearly ethical or unethical • Unethical behaviors have had detrimental effects on many companies • A leader can encourage ethical behaviour by promoting social responsibility • Ethical behaviour is related to financial performance SUMMARY CTD
  35. RMIT Classification: Trusted Discussion Questions • How do you, as a leader, create an ethical and socially responsible culture? • A number of studies found that many deaths and injuries each year in several countries are attributed to speaking on mobile phones while driving. Should you, as a leader of a mobile phone service provider, have social responsibility obligations for dealing with this problem? Discuss. • Identify three reasons why leaders should act responsibly. Explain your response.