1. © Prentice Hall 2006 CHAPTER TWELVE LEADERSHIP ETHICS AND DIVERSITY 12-1

2. © Prentice Hall 2006 Learning Objectives  Explain why ethical leadership is so important in organizations.  Describe major ethical issues that leaders face and approaches for addressing those issues.  Explain how leaders can create an ethical climate in their organization. 12-2 After reading this chapter, you should be able to do the following:

3. © Prentice Hall 2006 Learning Objectives  Describe the role of spirituality in creating an ethical organizational climate.  Explain the competitive and advantages of diversity for organizations.  Describe leadership strategies and behaviors for creating a multicultural organization. 12-3 After reading this chapter, you should be able to do the following:

4. © Prentice Hall 2006 An Example of Leadership Ethics The collapse of Enron  Enron executives developed a deceiving web of pseudo-partnerships with newly created “investment companies” that were actually Enron subsidiaries.  The executives had encouraged and modeled an organizational culture of individualism, innovation, aggressive cleverness, and excess at the expense of compassionate, honest, and responsible leadership.  These unethical leaders demonstrate the importance of leadership in establishing an ethical climate in an organization.  Leaders are the prime example that followers emulate when it comes to ethical or unethical behavior. 12-4

5. © Prentice Hall 2006 Ethics and Leadership Ethics is the study of morality and the moral choices people make in their relationships with others.  Ethics concerns how we should behave in the roles that society gives us.  Leaders are often in roles that can determine the well-being of others and they sometimes influence the broader good. technically good (effective) morally good. 12-5

6. © Prentice Hall 2006 Power Power is the basis for a leader’s influence on followers  the more power a leader has, the more likely that followers will comply with the leader’s wishes  the greater a leader’s power, the greater the potential for abuse 12-6

7. © Prentice Hall 2006 Corrupting influences of power  Power may become desired as an end in itself and be sought at any cost  Power differences may cause followers to give the leader false positive feedback and create an elevated sense of self-worth on the leader  The leader may devalue followers’ worth and to avoid regular contact with followers or mistreat them A leader’s failure to acknowledge the ethical limits of power causes a loss of credibility and trust and does devastating damage to the leader and his constituency 12-7

8. © Prentice Hall 2006 Moral Consistency If leaders’ behavior does not match their stated values, they will lose the trust of their followers and colleagues A leader’s moral inconsistencies are open to public scrutiny Leaders who do not behave consistently with their stated ethical values risk being labeled hypocrites. 12-8

9. © Prentice Hall 2006 Approaches to Ethical Behavior Altruism Primary concern is for others’ welfare Altruism Primary concern is for others’ welfare Virtue Ethic High moral character results in ethical behavior. Virtue Ethic High moral character results in ethical behavior. Categorical Imperative Follow universal moral laws Categorical Imperative Follow universal moral laws Approaches to Ethical Behavior Approaches to Ethical Behavior Moral Learning Persistent efforts to be just, prudent, & truthful. Moral Learning Persistent efforts to be just, prudent, & truthful. Utilitarianism Greatest good for greatest number Utilitarianism Greatest good for greatest number 12-9

10. © Prentice Hall 2006 Creating an Ethical Climate Rewarding ethical and punishing unethical behavior. Rewarding ethical and punishing unethical behavior. Socially responsible charismatic/transformational leadership. Socially responsible charismatic/transformational leadership. Role modeling important values and behaviors. Role modeling important values and behaviors. Creating an Ethical Climate Creating an Ethical Climate Spiritual awareness as a guide to action Spiritual awareness as a guide to action Directing ethical policies and practices Directing ethical policies and practices 11-10 Conducting participative discussions of ethical assumptions and actions. Conducting participative discussions of ethical assumptions and actions.

11. © Prentice Hall 2006 Charismatic/Transformational Leadership and Ethics Charismatic/transformational leaders are considered unethical when their behavior reflects a self-serving or egotistical bias rather than altruistic values. Some charismatic/transformational leaders behave unethically because they are so committed to other- oriented values that they mistakenly believe generally applicable moral requirements do not apply to them. Transformational leaders sometimes assume followers are ignorant and leaders have superior knowledge and insight this encourages leaders to believe that normal ethical requirements do not apply to their behavior. 12-11

12. © Prentice Hall 2006 Spirituality  Spirituality is part of our nature as humans,  The content of our work and the context (environment) help determine our total work experience,  the work context and/or content today are often injurious to the human spirit and may be getting worse,  Embracing spirituality at work may help counteract these injurious trends and benefit organizations, their members, and communities 12-12

13. © Prentice Hall 2006 DIVERSITY Diversity refers to the multiple social, cultural, physical, and environmental differences among people that affect the way they think, feel and behave 12-13

14. © Prentice Hall 2006 Competitive Advantages of Diversity Creative Ideas And Solutions To Problems Creative Ideas And Solutions To Problems Flexibility in Adapting to Environment Flexibility in Adapting to Environment Outstanding Human Resources Outstanding Human Resources Competitive Advantages of Diversity Competitive Advantages of Diversity Cost Savings From Experience At Integration Cost Savings From Experience At Integration Effective Marketing Strategies Effective Marketing Strategies 12-14

15. © Prentice Hall 2006 Leadership for Diversity Leadership for Diversity Leadership for Diversity 12-15 Rewarding and recognizing those who promote and participate in diversity programs. Participating in training and in discussions on diversity issues and programs. Boundary-spanning to help minorities build networks and support groups. Directing all employees to participate in diversity training and seminars. Supportiveness through creation of flexible personnel policies and mentoring.