Leadership and Unethical Decisions

1. Leadership and Unethical Decisions Joseph Bahnsen Catrina Cook Mandy Crabtree Terri Dalton Doris Davis Siena Heights University

2. Introduction • These practices place a large burden on corporations, companies and organizations. • Despite the fact some unethical behaviors are illegal and put the organization at risk, some leaders and management still chose to behave unethically • The basis of this paper is to identify and discuss various unethical behaviors and consequences throughout a number of business entities and government offices. • (1) unethical hiring practices; (2) unethical practices through self-employment; (3) unethical practices resulting in the loss of employment; (4) unethical practices when employed as a consultant; (5) elected public officials and unethical practices; and (6) incarceration as a result of unethical practices.

3. Unethical Hiring Practices The following unethical practices can occur with an organization: • Nepotism • Defined as a powerful person giving jobs and favors to relatives and friends (Merriam-Webster, n.a.). This practice undermines the process of hiring qualified applicants for the position (Cloud, 2006). • Discrimination • Discrimination based on age, weight, race, gender, disabilities etc. • The supervisor discriminating against an individual based on his or her health condition (Leonard, 1985). • For example, health conditions such as HIV/AIDS, Cancer, etc. • Favoritism • The leader hires applicants who do not have the necessary skills and qualifications to perform the job (Arasli, Bavik, & Ekiz 2006). • Consequences of Unethical Hiring Practices • Places the company at risk. • Policies and Procedures should be implemented to identify unethical hiring practices.

4. Unethical Practices Through Self-Employment • Unethical practices can occur in both large corporate organizations as well as at the self-employment level. • When unethical practices are identified in regards to a person who is self-employed through the retail of a product or service, the individuals name can become sullied. • This can cause sales and/or income to drop drastically, which consequently exposes the organization to the risk of having to stop doing business, or even risk bankruptcy (Hyytinen, 2008). • Robson and Wren (1999) suggest one of the perks for people to become self-employed is being offered different stipulations on paying taxes in the individuals favor. However, Robson and Wren (1999) then go on to suggest there is a higher correlation of tax evasion and self-employment (Robson, 1999)

5. Unethical Practices Resulting in the Loss of Employment • According to Mattord and Whitman (2011), there are three general causes of unethical behavior: (1) through ignorance of policies, procedures and the law; (2) as the result of accident or oversight; and (3) when the unethical behavior is committed intentionally. • Typically, when the media exposes an organization for malpractice or unethical behavior the organization experiences a major downward spiral. When businesses lose employees due to unethical decision-making behavior, the cost to the business can be very high. • According to Collins (2009), a great example of loss of employment due to unethical behaviors occurred the early 2000s. Kenneth Lay, Bernie Ebbers, Dennis Kozlowski, and other high-level corporate executives were handcuffed, paraded before the media, and found guilty of crimes associated with greed, theft, and other unethical behaviors

6. Unethical Practices When Employed as a Consultant • Working as a consultant entails giving a clientele expert advice in a professional manner. • Gunthrope (1997) states two different things happen when a company discovers they have been dealing with an unethical consultant: (1) the company who hired the consultant will have to regroup and potentially have to seek out a new consultant; and (2) the company may have to pay fines and penalties as result (Gunthrope, 1997). • Unethical consultants could possibly be held responsible for their wrong doings. Regardless, both of these scenarios will have financial costs associated with them. • When reputations are compromised, there will likely be a reduction in business costing the organization to experience monetary losses (Gunthorpe, 1997).

7. Elected Public Officials and Unethical Practices • Bad behavior in politics can trickle down into society. Arnott (2003) states, “Business and politics are mirrors of society (Arnott, 2003, p. 1).” • A good example of a fallen politician would be former Mayor of Detroit, Kwame Kilpatrick. Kilpatrick was charged with thirty counts of racketeering, bribery, mail fraud and wire fraud from the Civic Fund ( The purpose of the Civic Fund was to promote neighborhood improvement and activities for young people (“Kilpatrick trial,”2013). He was later found guilty on thirteen of the thirty counts ("Kilpatrick trial," 2013). • Elected Officials are not an exception to the rule of ethics; rather their behavior should be the governing rule of ethics as they lead by example. As seen in the City of Detroit, when an elected official becomes corrupt with power, the city and its constituents suffer as well.

8. Incarceration as a Result of Unethical Practices • Enron is a good example of an organization with unethical behavior and corruption rooted throughout the company. • Andrew Fastow (CFO) faced 98 counts of money laundering, fraud, and conspiracy. He was sentenced to 10 years in prison.

9. Conclusion • Though unethical behavior exists in nearly every facet of life, as mentioned in this paper, there is clearly negative consequences that go along with the behavior. It does not matter is the decisions are small or on a larger scale, there are consequences. Unethical decisions, when they are exposed tend to give a bad reputation to either the person or the corporation. After this tarnished view is something many will remember forever, and for those that chose to forget, it typically takes a time, effort, and money to get back to their neutral image. Practicing integrity and honesty in all we do is key to avoid going down the wrong path.

10. References • Arasli, H., Bavik, A., & Ekiz, E. H. (2006). The effects of nepotism on human resource management. International Journal of Sociology and Social Policy, 26(78), pp. 295 - 308. doi:10.1108/01443330610680399 • Arnott, R. D. (2003). Who's minding the store? Financial Analysts Journal, 59(6), 4-8. Retrieved from http://search.proquest.com/docview/219228134?accountid=28644 • Ashforth, B., & Anand, V. (2003). The Normalization of corruption in organizations. Research in Organizational Behavior, 25(1), 1-52. • Chandler, D. J. (2009). The perfect storm of leaders’ unethical behavior: A conceptual framework. International Journal of Leadership Studies, 5(1), pp. 69 - 93. Retrieved from http://www.regent.edu/acad/global/publications/ijls/new/vol5iss1/IJLS_Vol5Is1_Chandler% 20%282%29.pdf • Cloud, D. H. (2006). Integrity: The Courage to Meet the Demands of Reality. New York: HarperBusiness. • Collins, D. (2009, November 30). Reducing Ethical Risks: An Organization Systems Solution. Retrieved from edgewood.edu: http://business- ethics.edgewood.edu/Optimal%20Ethics%20Risks.BH.pdf • Craft, J. (2010, November). Making the case for ongoing and interactive organizational ethics training. Human Resource Development International(13), pp. 599 - 606.

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12. References Cont. • Redekop, B.W., & Heath, B. L. (2007) A brief examination of the nature, contexts, and causes of unethical consultant behaviors. Journal of Practical Consulting, 1, 2. Retrieved from http://www.regent.edu/acad/global/publications/jpc/vol1iss2/redekop/redekop.htm • Robson, M. T., & Wren, C. (1999). Marginal and average tax rates and the incentive for self- employment. Southern Economic Journal, 65(4), 757-773. Retrieved from http://search.proquest.com/docview/212118537?accountid=28644