1. Entrepreneurship and Small Business Management
Chapter 20
Leadership and Ethical Practices

2. Ch. 20 Performance Objectives
Identify leadership styles.
Organize for effective time management.
Pursue ethical leadership to build an ethical organization.

3. Ch. 20 Performance Objectives (continued)
Make sure your business is run in an ethical manner.
Maintain your integrity.
Incorporate social responsibility into your company.

4. A Leader…
Gets things done through influence by guiding or inspiring others to voluntarily participate in a cause
Has self-esteem
Inspires confidence in others
Thinks positively

5. Leadership Styles Coercive—pressure/commanding approach
Pro: effective in disasters or with employees who need forceful management
Con: hurts employee morale and creativity
Authoritative—leader sets goal but allows process flexibility (“come with me” approach)
Pro: works well if the leader is an expert
Con: not effective if the leader is not an expert and is trying to lead people who are

6. Leadership Styles (continued)
Affiliative—”people come first” approach
Pro: gets employees on board
Con: can fail to give adequate direction
Democratic—gives employees strong voice in company
Pro: builds morale
Con: can result in endless meetings and stagnation

7. Leadership Styles (continued)
Pacesetting—sets high standards for self, and challenges employees to meet them, too
Pro: great when employees are self-motivated
Con: can overwhelm less committed employees
Coaching—focuses on helping employees learn and grow
Pro: good approach with new employees
Con: may not work with long-term employees who are resistant to change

8. How Will You Pay Yourself?
Commission
A set percentage of every sale
Variable operating cost (fluctuates with sales)
Salary
Fixed amount of money paid at set intervals
Fixed operating cost (does not change with sales)
Wage
Fixed amount per hour
Cost of goods sold (COGS)
Dividend—share of company profits deducted from net profit (after taxes)

9. Manage Time Wisely

10. Time Management Tips Prioritize; know what’s important
Set realistic daily goals; allow for flexibility
Check a limited number of times a day
Avoid distractions from electronic devices
Try stand-up meetings
Accept meeting invitations when your presence is required for progress
Delegate responsibility and authority
Allow for downtime and creative-thinking time

11. Ethical Leadership in Organizations
Ethics—principles that define a code of behavior to distinguish between right & wrong
Your values and behavior set the ethical tone for your company.
A behavior may be legal but still not ethical.
Customers return to businesses that treat them ethically.
Employees who feel used by their employers will not do their best work.
To build an ethical organization, values and standards of conduct must be clearly defined.

12. Establishing Ethical Standards
Code of ethics—a statement of the company’s values
Code of conduct—set of official standards of employee behavior
Code of ethics and business conduct—combines the written statement of values with the official standards of employee behavior

13. Six Pillars of Character
Value
Actualized Form
Trustworthiness
Honesty, integrity, reliability (promise-keeping), loyalty
Respect
Civility, courtesy, decency, dignity, autonomy, tolerance, acceptance
Responsibility
Accountability, pursuit of excellence, self-restraint
Caring
Concern for others, compassion, benevolence, altruism
Fairness
Process (open and impartial), impartiality, equity
Citizenship
Law abiding, volunteerism, environmental awareness, action

14. Making Sure Your Business is Run in an Ethical Manner
Give employees the opportunity to learn, understand, and adopt the code of ethics as part of their formal training and orientation.
Implement methods to collect information and make changes.
Open communications
“Tip line” or “tip box” to identify ethical problems
Protection for whistle-blowers

15. Corporate Ethical Scandals
Companies that published false financial statements, inflating their earnings and misleading investors:
Enron
WorldCom-MCI
Tyco
Global Crossing
Stock investors and employees with retirement funds in company stock lost millions of dollars.
These scandals were failures of corporate governance: there were no rules or safeguards in place to ensure that executives behaved legally and ethically.

16. Corporate Governance
Do not treat company profits as personal funds. Choose a wage, salary, or dividend arrangement and document it.
Keep accurate financial records and have them checked once a year by a reputable accountant.
Use financial controls.
Create an advisory board of people with strong ethics.

17. Maintaining Your Integrity
Integrity—upholding behavioral standards
All codes of ethics and conduct are worthless without the integrity to put words into action.
Acting ethically is not something done only when convenient or not costly.
Integrity is a daily, decision-by-decision process.
Maintain compliance with government laws by staying up-to-date on regulation changes.

18. Encourage Social Responsibility
Recycle in the office.
Donate a portion of business profits to a charity that employees support.
Refuse to use animals for testing products.
Offer employees incentives to volunteer in their communities.
Establish a safe, healthy workplace.
Emphasize being a sustainable business.