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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.

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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.

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• 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
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• BOEING KNEW OF PROBLEMS
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• 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
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•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

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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.

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• Individual factors
• Situational factors
FACTORS INFLUENCING ETHICAL
LEADERSHIP BEHAVIOUR

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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.

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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.

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• 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

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• 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

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• 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

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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

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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.

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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

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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

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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.

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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.

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Comparing Unethical Versus Ethical Leadership

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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)
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• 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

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so why is it so difficult to be ethical?
because what is ethical is not always clear
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QUESTION

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• 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

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• 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

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• Creating a pleasant workplace
• Guarding the environment
• Engaging in philanthropy
• Working with suppliers to improve
working conditions
SOCIALLY RESPONSIBLE
ACTIONS

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• 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

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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.
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HOW TO ACT ETHICALLY AS
A LEADER

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• 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

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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

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• 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

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© 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

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• 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

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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.