Week 4

Ethical issues and Leadership

Ethics is about the way we treat others.

• Many issues about the way we treat others.

Is this Ethical or not, if so why or why not.

Digression into Leadership

• Trust and Leadership.

• Think of leaders you have trusted.

• What qualities did they have?

• Think of leaders you distrusted.

• What made you distrust them.

• Note some people have suggested trust is easy to lose and hard to build. Distrust operates differently than trust.

Why Is Trust in Leadership Important?

• What happens when subordinates trust leaders?

• What happens when subordinates distrust leaders?

Can a supervisor be effective without having subordinate trust?

• This is not an easy question.

So How are Ethics, Trust, and Leadership Related?

• How do good leaders build trust?

• How do poor leaders lose trust?

Ethical Issues in Leadership

• Information, communication, and expectations (discuss later).

• Confidentiality of information.

• What do you share with others?

• Co-workers. Can you discuss performance issues of others behind their backs. Access to records.

• References?

Ethics and Justice

• Book does not raise this issue directly. Ethics relates to treating employees fairly rather than treating them arbitrarily.

• Managers who treat employees unfairly could readily be PERCEIVED to be unethical by others.

• Office Space was Lumberg ethical or not to Milton.

Ethics and Justice

• Distributive Justice• Are the rewards/punishments given out similarly

for similar consequences? Lets go through some cases.

• Would similar people be treated similarly.• P. 147 case.• When is it ok to treat people dissimilarly.• Much harder question.• Example, when would it be OK to treat Milton

like he got treated.

Procedural Justice

• Follow certain guidelines consistently for everyone.

• Examples—in recruiting is everyone treated similarly—asked similar types of questions.

• Performance appraisal—are sources used the same for everyone.

Procedural Justice Includes

• Grievance system

• If have problems, perhaps due to bias, someone has a chance to correct the problem.

Justice perspective will be revisited throughout the course.

• Procedural (process)

• Distributive (outcome).

• Usually employees. But procedural can apply to consumer, shareholder, business alliance, community etc as stakeholders.

Conflicts of interest

• Conflict of interest occurs when your self interests compromise your ability to make objective decisions.

• Appearance of a conflict of interest vs actual.• CEO and corporate foundation• Enron and conflicts of interest.• Includes bribes/kickback• Influence peddling• Privileged information (insider trading).• Can a CEO have too many stock options?

Conflicts of interest abound

• Can you supervise your friends? Is it a conflict of interest?

• Think about supervisor dating subordinate.

• When does it lead to an appearance of conflict of interest?

• Other examples of conflicts of interest.

• What types of problems occur with conflicts of interest?

How does one deal with Conflicts of interest

• First, minimize exposure.

• Blow the whistle on people who try kickbacks.

• When transparent conflict, have someone else make decision.

• Accounting and approval of expenditures for self.

Al Dunlap and Ethics Case

Ethics and work force diversity.

• How do you manage people who are different.

• Communication skills play an important role.

• Does this create problems with Distributive justice?

• A positive approach to diversity.

Characteristics of people who show respect

Big question

• Inappropriate performance. Can one give corrective comments and still show respect?

• How?

Relationships with subordinates

• Hiring• Performance appraisal• Terminations.• Discipline• Harassment• Family and personal issues.• Employment Law.• Giving people assignments.

Case’s and Managing this well.

Managers as a Role model/shaper of behavior.

• Managers are responsible for the behavior of their employees. If employees are harassing other employees and manager does nothing then what does this communicate to those doing the harassing? Back Stabbing.

Managers need to set standards

• Make them clear and unequivocal. Performance appraisal.

• Many employees try to figure out what supervisor wants.

• Be careful about what you say.• Continually communicate standards. Publicly

and privately.• Staff meetings. Monitor progress on standards.

Report that progress. (Al Dunlap did this OK).

Here is an important element

• To what extent should managers be flexible.

• Situations are complex. Similar situations deal require different actions.

• Two employees come to work drunk against company policy. One is outstanding worker and one is below average. What do you do?

Another situation

• Trying to change processes and move from decentralized to centralized system of purchasing to save inventory costs and shipping time (just in time inventory).

• A long time supplier has cut deals in the past but can not manage the just in time processes. You have an alternate supplier who you believe can do both. What do you do?

Managers as a role model.

• What you do, others are likely to imitate.

• If you act with respect to all, then others are likely to do. If disrespect, then disrespect.

• Open communication.

Book says

• Communication is key to ethics and management.

• Book says honesty is rule #1.

• Is it that simple?

Think about customer Relationships

• What are relationships like when there is distrust?

• What are relationships like when there is trust?

In summary:

• Examples of good managers—ethical managers.

• Can a good manager be unethical?

• Does one’s career suffer for being too ethical? Do the unethical people rise to the top?