Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 1 Values-Based Leadership: Doing the Right Thing

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 2 Business Ethics The fundamental moral values and behavioral standards that form the foundation for the people of an organization as they make decisions and interact with stakeholders.

Key Stakeholders Employee s Customers Investors Creditors Government General Public Suppliers Board of Director s Board of Director s Management Special Interest Groups Special Interest Groups Unions Internal Stakeholders External Stakeholders

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 4 Three Levels of Ethical Standards The law The law Organizational policies and procedures Organizational policies and procedures The moral stance employees take when faced with decisions not governed by formal rules The moral stance employees take when faced with decisions not governed by formal rules

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 5 Ethical Philosophies Consequentialists – judge the value of an act based on its effect on others. Consequentialists – judge the value of an act based on its effect on others. Deontologists – judge the value of an act based on its logical consistency and its ability to become a universal standard. Deontologists – judge the value of an act based on its logical consistency and its ability to become a universal standard.

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 6 Ethical Philosophies Objectivists – moral values can objectively true – independent of subjective feelings. Objectivists – moral values can objectively true – independent of subjective feelings. Relativists – Right and wrong must be defined within the context of moral norms and mores. Relativists – Right and wrong must be defined within the context of moral norms and mores.

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 7 Three Levels of Moral Development Level 1: Pre-conventional Level 2: Conventional Level 3: Post-conventional (Principled)

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 8 An Ethical Framework Step 1. Recognize the ethical dimensions involved in the dilemma or decision. Step 2. Identify the key stakeholders involved and determine how the decision will affect them. Step 3. Generate alternative choices and distinguish between ethical and unethical responses. Step 4. Choose the “best” ethical response and implement it.

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 9 Three Styles of Management Immoral management - driving force is greed. Immoral management - driving force is greed. Amoral management - does not consider ethical impact on others. Amoral management - does not consider ethical impact on others. Moral management - sees the law as a minimum standard of behavior. Moral management - sees the law as a minimum standard of behavior.

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 10 The Benefits of Moral Management Earning a profit does not conflict with maintaining high ethical standards. 1. Avoid the damage to a company’s reputation that results from unethical behavior. 2. Dealing with diverse stakeholders is easier with a solid ethical foundation. 3. Attracting and retaining quality workers is easier. 4. A company’s ethical philosophy determines its ability to provide value for its customers.

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 11 Why Ethical Lapses Occur The “bad apple” The “bad apple” The “bad barrel” The “bad barrel” Moral blindness Moral blindness Competitive pressures Competitive pressures Opportunity pressures Opportunity pressures Globalization of business Globalization of business

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 12 Establishing Ethical Standards The utilitarian principle The utilitarian principle Kant's categorical imperative Kant's categorical imperative The professional ethic The professional ethic The Golden Rule The Golden Rule The television test The television test The family test The family test

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 13 Maintaining Ethical Standards Create a company credo Create a company credo Develop a code of ethics Develop a code of ethics Enforce the code fairly and consistently Enforce the code fairly and consistently Conduct ethics training Conduct ethics training Hire the right people Hire the right people

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 14 Perform periodic ethical audits Perform periodic ethical audits Establish high standards of behavior...not just rules Establish high standards of behavior...not just rules Set an impeccable ethical example Set an impeccable ethical example Create a culture that emphasizes two-way communication Create a culture that emphasizes two-way communication Involve employees in establishing ethical standards Involve employees in establishing ethical standards Maintaining Ethical Standards

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 15 Set an impeccable ethical example at all times. Set an impeccable ethical example at all times. Create a culture that emphasizes two-way communication. Create a culture that emphasizes two-way communication. Involve employees in establishing ethical standards. Involve employees in establishing ethical standards. Maintaining Ethical Standards

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 16 Social Responsibility Social responsibility - the awareness by a company’s managers of the social environmental, political, human, and financial consequences its actions produce. Studies: Companies that incorporate social responsibility into their competitive strategies outperform those that fail to do so.

Business has a Social Responsibility to... The environment The environment Employees Employees Customers Customers Investors Investors The community The community

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 18 Responsibility to the Environment The “Three R’s”: The “Three R’s”: Reduce the amount of materials used in your company. Reduce the amount of materials used in your company. Reuse whatever you can. Reuse whatever you can. Recycle the materials that you must dispose of. Recycle the materials that you must dispose of.

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 19 Responsibility to Employees Diversity Diversity

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 20 SPLENDID Approach to Diversity Study Study Plan Plan Lead Lead Encourage Encourage Notice Notice Discussion Discussion Inclusion Inclusion Dedication Dedication

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 21 Managing Diversity Assess your company’s diversity needs. Assess your company’s diversity needs. Learn to recognize your own biases and stereotypes. Learn to recognize your own biases and stereotypes. Avoid making invalid assumptions. Avoid making invalid assumptions. Push for diversity in your management team. Push for diversity in your management team.

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 22 Concentrate on communication. Concentrate on communication. Make diversity a core value in the organization. Make diversity a core value in the organization. Continue to adjust your company to your workers. Continue to adjust your company to your workers. Managing Diversity

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 23 Responsibility to Employees Diversity Diversity Drug testing Drug testing

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 24 A Drug Prevention Program Should Include... A written substance abuse policy. A written substance abuse policy. Training supervisors to detect drug- using workers. Training supervisors to detect drug- using workers. A drug testing program, when necessary. A drug testing program, when necessary. An employee assistance program (EAP). An employee assistance program (EAP).

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 25 Responsibility to Employees Diversity Diversity Drug testing Drug testing AIDS AIDS

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 26 An AIDS Policy Should Address.. Employment Employment Discrimination Discrimination Employee benefits Employee benefits Confidentiality Confidentiality Education Education “Reasonable accommodations” “Reasonable accommodations”

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 27 Responsibility to Employees Diversity Diversity Drug testing Drug testing AIDS AIDS Sexual harassment Sexual harassment

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 28 Sexual Harassment Any unwelcome sexual advance, request for sexual favors, or other verbal or physical sexual conduct made explicitly or implicitly as a condition of employment. Any unwelcome sexual advance, request for sexual favors, or other verbal or physical sexual conduct made explicitly or implicitly as a condition of employment. 85% of sexual harassment cases are filed by women. 85% of sexual harassment cases are filed by women. Harassment an take several forms. Harassment an take several forms.

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 29 Behavior Leading to Sexual Harassment Charges Quid Pro Quo (“something for something”) harassment Quid Pro Quo (“something for something”) harassment Hostile environment Hostile environment Harassment by nonemployees Harassment by nonemployees

Source: Equal Employment Opportunity Commission, 2004

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 31 Preventing Sexual Harassment Education Education Policy Policy Procedure Procedure  Listen without judging.  Investigate complaints promptly.  Interview parties involved and witnesses.  Maintain confidentiality.  Follow company policy.  Document the investigation.

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 32 Responsibility to Employees Diversity Diversity Drug testing Drug testing AIDS AIDS Sexual harassment Sexual harassment Privacy Privacy

Chapter 21 Values-Based Leadership Copyright 2006 Prentice Hall Publishing Company 33 Responsibility to Customers Right to safety Right to safety Right to know Right to know Right to be heard Right to be heard Right to education Right to education Right to choice Right to choice