1 Introduction to Ethical Leadership Jennifer Sawayda Program Specialist Anderson School of Management University of New Mexico Albuquerque, NM © O.C. and Linda Ferrell

2 What Is It? Ethical leadership involves leading others to obtain organizational goals in an ethical manner. –Ethical leaders view employees not simply as followers, but as stakeholders crucial to obtaining shared organizational goals

3 Benefits of Ethical Leadership Evidence shows that ethical leadership is positively related to: –Employee job satisfaction An LRN survey found that 82% of respondents would take a pay cut to work for an ethical company –Shared values –Organizational citizenship –Consumer value Consumers are more likely to pay higher prices for ethically produced products –Strong stakeholder relationships

4 Benefits of Ethical Leadership Ethical leadership is negatively related to: –Employee turnover –Employee deviance –Organizational misconduct –Despotic leadership style

5 Characteristics of Ethical Leaders Model organizational values –Hold themselves accountable for ethical well-being of firm Place organization’s interests over own Train others as leaders Understand limitations Empathetic Align employees behind common vision

6 Principles and Values Ethical leaders promote shared principles and values in an organization –Principles: universal boundaries for behavior that shouldn’t be violated Human rights, justice –Values: enduring beliefs and ideals that are socially enforced Teamwork, trust, employee empowerment

7 Elements of an Ethical Culture Strong internal controls Ethics program Open discussion of ethics concerns Communication between leaders and followers Empowered employees

8 Ethical Leaders Support Ethics Programs Code of Ethics Support from top management Somebody to take charge of program Ethics training Reporting mechanisms Monitoring ethical performance Continuous improvement

9 Leadership Styles Transactional leader –Negotiate for levels of employee performance Transformational leader –Raise the level of employee commitment and inspiration Coercive leader –Uses threat of punishment to obtain compliance Charismatic leader –Skilled at getting employees to stand behind a common goal or mission Authentic leader –Passionate about the goals and mission of the company –Continually display corporate values in the workplace –Try to form long-term relationships with stakeholders

10 The Dangers of Narcissism It was once thought that narcissistic behaviors were needed to succeed in business But evidences shows that hostility toward others, coercion, and manipulation are negatively related to ethical leadership –Corporate psychopaths often exhibit these behaviors Seem respectable but are ruthless Organizational bullying is common—to the detriment of the organization

11 Communication between Ethical Leaders and Employees Ethical leaders should know when to use the four different types of communication –Interpersonal communication: When two or more people interact with each other –Small group communication: When small groups engage in interaction and decision making –Nonverbal communication: Communication expressed through body language, expressions, actions, etc. –Listening: Paying attention to both verbal and nonverbal behavior

12 Conflict Management Competing Avoiding Accommodating Collaborating Compromising Assertiveness Cooperation high low high Kenneth W. Thomas and Ralph H. Kilmann (March 2, 2010). Thomas-Kilmann Conflict Mode Instrument: Profile and Interpretative Report. © CPP, Inc.

13 Conflict Management, cont. There are five conflict management styles: –Competing: Win at all costs –Avoiding: Avoid conflict at all costs –Accommodating: Will accommodate the other side no matter what –Compromising: Believe the best solution is for each side to give something up –Collaborative: Seeks a win-win solution; most common with ethical leadership

14 Employee-Centered Leadership Employees are active participants in maintaining an ethical culture Employees can be encouraged to practice leadership –Open communication culture –Mechanisms for dissent (e.g. hotlines) –Leadership training