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Ethical Leadership: Creating An Ethical Culture. Linda K. Trevino, Ph.D. Copyright 2005 Smeal College of Business, The Pennsylvania State University Ethical leadership research conducted with Laura Hartman and Michael Brown supported by the Ethics Resource Center Fellows Program .

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ethical leadership creating an ethical culture

Ethical Leadership: Creating An Ethical Culture

Linda K. Trevino, Ph.D. Copyright 2005

Smeal College of Business, The Pennsylvania State University

Ethical leadership research conducted

with Laura Hartman and Michael Brown

supported by the Ethics Resource Center Fellows Program

slide2

Executive leadership andethical culture

ETHICAL CULTURE

INFORMAL SYSTEMS

FORMAL SYSTEMS

Exec Leadership

Rules/Policies

Reward System

Selection System

Orientation/Training

Decision Processes

Daily Leader Behavior /Heroes

Informal Norms

Fair Treatment

Rituals

Myths/Stories

Language

Ethical and Unethical Behavior

executive ethical leadership the good news
Executive Ethical LeadershipThe Good News!
  • Everyone we interviewed (40 interviewees) was able to quickly think of someone they would identify as an executive ethical leader and answer questions about that person for about an hour. That suggested to us that executive ethical leadership is not as rare as it may seem in the headlines.
what we learned about executive ethical leadership
What We Learned about Executive Ethical Leadership
  • It’s about reputation - perceptions from a distance of two dimensions (moral person and moral manager) that result in four types of reputation possible
  • Executives must stand out from a (generally) ethically neutral background in order to be perceived by employees as “ethical leaders”
dimensions of executive ethical leadership
Dimensions of Executive Ethical Leadership

Moral Person:Moral Manager:

(leader’s behavior) (directs followers’ behavior)

- Traits - Role Modeling

honesty, integrity, trust visible ethical action

- Behaviors - Rewards/Discipline

openness, concern for people, holds people accountable

personal morality for ethical conduct

- Decision-making - Communicating

values-based, fairconveys an “ethics/values” message

executive ethical leadership reputation matrix
Executive Ethical Leadership Reputation Matrix

Moral Person

Moral

Manager

Weak

Strong

Strong

Hypocritical Leader

Ethical Leader

?

Unethical Leader

Weak

Ethically neutral (silent) leader

ethical leadership example
Ethical Leadership Example

Moral Person

Moral

Manager

High

Ethical Leader

High

James Burke,

Johnson & Johnson

Known to be a person of the highest integrity. Reinvigorated and revised corporate credo, launched annual credo survey after Tylenol crisis, required action plans to address problems, handled ethical violations swiftly

unethical leadership example
Unethical Leadership Example

Moral Person

Moral

Manager

Low

Lied to employees & financial analysts, was condescending, belligerent and disrespectful of employees, made decisions and rewarded employees based upon bottom line only, left company crippled, accused of filing false financial reports - settled with SEC for half million dollars.

Unethical Leader

Al Dunlap,

Sunbeam

Low

hypocritical leadership example
Hypocritical Leadership Example

Moral Person

Moral

Manager

Weak

Hypocritical

Leader

Jim Bakker of PTL Ministries

Strong

Talked about ethics, religion (doing “God’s work”). Yet, employees became aware of deceptive financial practices, conflicts of interest, lying to donors, theft of donor contributions, sexual liaisons, etc!

ethically neutral leadership example
Ethically Neutral Leadership Example

Moral Person

Moral

Manager

Strong?

Intense focus on bottom line. Decentralized management style means that ethics management is left to business unit managers. Centralized ethics support structure that existed under predecessor dismantled. Described by Fortune magazine as “tone deaf” on ethics issues. Citigroup has dealt with a variety of conflicts of interest scandals.

Weak

Ethically Neutral Leader

Sandy Weill, Citigroup

conclusions about executive ethical leadership
Conclusions About Executive Ethical Leadership
  • To be perceived as an ethical leader, must be a visibly ethical PERSON and an ethical MANAGER with a consistent message
      • Being a moral person alone is insufficient
        • Executives are distant from most employees and, without “moral management,” bottom line messages can overwhelm all others.
      • Being a moral manager is insufficient
        • Moral management (proactive words and actions) gain legitimacy only if employees believe the exec is a principled, caring person who means what s/he says (counters cynicism)
conclusions
Conclusions
  • Executive ethical leadership is
    • Much more than traits (e.g., integrity)
    • Requires great care to create and sustain an ethical culture that sends a consistent message that is at least as powerful as the “bottom line” drumbeat (via real attention to ethics in multiple cultural systems).
what s next what can you do
What’s Next? What Can You Do?
  • How do you know what messages you and your organization’s culture are sending?
    • Given that the higher one goes in the organization, the more “rosy” the perception of ethical climate!
slide15

How Can You Change Ethical Culture?

ETHICAL CULTURE

INFORMAL SYSTEMS

FORMAL SYSTEMS

Exec Leadership

Rules/Policies

Reward System

Selection System

Orientation/Training

Decision Processes

Daily Leader Behavior /Heroes

Informal Norms

Fair Treatment

Rituals

Myths/Stories

Language

Ethical and Unethical Behavior