Ethical Leadership - The experience of JCU's 3rd IBD cohort


·        Leaders are responsible for creating the organizations we admire for their ethical behavior.

·        Leaders are the ethics officers of their organizations.

·        Social learning theory to explain how leaders influence followers (Brown & Trevino):

o       Followers look to leaders as role models and act accordingly.

o       Leaders are generally seen as legitimate, credible, and attractive because they occupy positions of authority with power and status.

o       Leaders increase legitimacy by treating employees fairly and boost their attractiveness by expressing care and concern.

o       Leaders enhance credibility by living up to the values they espouse.

·        Moral leaders ensure that ethics messages are not drowned out by other messages about tasks and profits.

o       Focus attention on ethics through frequent communication about values, mission, corporate standards, and importance of ethical behavior.

·        (Brown & Trevino) distinguish between ethical leaders and those who are unethical, hypocritical, or ethically neutral.

o       Unethical leader falls short as both a moral person and a moral influence agent; communicates that ethics don’t matter, just results.

o       Hypocritical leader talks about values, but doesn’t live up to rhetoric

o       Ethically neutral leader is not clearly seen as either ethical or unethical-does not send out strong messages about ethics and leaves followers unsure.  Appears to be self-centered and focused on bottom-line.



            -Best understood as part of an organization’s culture, and how it responds to ethical issues.  Ethical climate determines what members believe is right or wrong and shapes their ethical decision-making and behavior.

o       Victor and Cullen argue that climates can be classified according to five types of criteria used by members of an organization when making ethical decisions

o       Instrumental climates follow the principle of ethical egotism.  Decisions made based on selfish interest

o       Caring climates emphasize concern or care for others

o       Law and order climates are driven by external criteria such as professional codes of conduct.

o       Rules climates are governed by the policies, rules, and procedures developed in the organization.

o       Independence climates give members wide latitude to make their own decisions.

o       Each type poses its own challenges:

§         Instrumental often ignore needs of others

§         Care are tempted to overlook the rules to help out friends and colleagues

§         Law and order culture may be blind to needs of coworkers

§         Rules climates may be blind to societal norms

§         Independence produces best results when members have knowledge to make decisions




1.      Zero Tolerance For Destructive Behaviors

a.      Destructive behaviors include:

                                                                                      i.      Incivility

                                                                                   ii.      Aggression

                                                                                 iii.      Sexual harassment

                                                                                  iv.      Discrimination

2.      Integrity- ethical soundness, wholeness, and consistency

a.      Paine believes any effort to improve organizational integrity must include:

                                                                                      i.      Sensible, clearly communicated values and commitments.

                                                                                   ii.      Company leaders are committed to, and act on the values.

                                                                                 iii.      The values are part of the routine decision-making process and factored into every organizational activity.

                                                                                  iv.      Systems and structures support and reinforce organizational commitments.

                                                                                    v.      Leaders throughout the org. have the knowledge and skills they need to make ethical decisions.

3.      Process Focus (Concern for means and ends)

4.      Structural Reinforcement-three elements of organization’s structure have a strong impact on moral behavior:

a.      Monetary and non-monetary reward systems

b.      Performance and evaluation processes

c.      Decision-making rights and responsibilities

5.      Social Responsibility- Concern for those outside the organization is a sign of ethical climate, obligations to communities and stakeholders




-Pressure to maintain numbers

-Fear and silence

-Young’ Uns and a bigger than life CEO

-Weak board


-Innovation like no other

-Goodness in some areas atones for evil in others




-To create ethical organizational climates, leaders only rely heavily on three tools:

o       Core values

o       Codes of ethics

o       Ethical learning

-Core ideology

            Mgmt experts Collins and Porras use this term to refer to the central identity or character of an organization.  

o       Core values are first component of core ideology (see Box 9.3 on pg. 279 for examples)

o       Core purpose is second part of an organization’s ideology




- Ethical codes are a standard in the business world. 

- The benefits of having an ethical code are:

  1. Gives members and outside world an idea of where the organization stands on the topic of ethics.
  2. Improve the organization’s image and protect it from lawsuits.
  3. Helps encourage leaders and followers to steer away from unethical behavior.
  4. Written documents tend to have more meaning and positive influence.

- Most codes of ethics include:

o       Conflicts of Interest, Record Funds and Assets, Information, Outside Relationships, Employment Practices, and “Other” Practices.  


- Risk (can kill an organization), Ethical Weakness (always room to improve), and Change (Environment shifting) are the three factors that should encourage constant ethical learning.


- Organizational Learning and Ethical Improvement can be caused by the following:

o       Scanning Imperative – what outside forces might affect organization in the future?

o       Performance Gap – Where we are versus where we want to be.

o       Climate of Openness – Reduce barriers and group creates new ideas.

o       Continuous Education – Never-ending process of learning.

o       Involved Leadership – Involved leaders learn by becoming students.

o       System Perspective – Looking at the big picture of the organization.




Case Study 9.1 – Cutting Corners at the University


Academic cheating is widespread among college students in both the US and Canada.  Technology such as the web, cell phones, text/instant messages, and having the ability to cut and paste work has increased the cheating rate over the years.  Succeeding in the classroom is becoming more and more demanding; therefore many students are cheating to get better grades on tests, papers, and other projects/assignments.  Students are found cheating in high school to get into college, then college to get jobs and go to grad school, and then grad school to get better positions down the road.  Many people who cheat early in life carry it on to their professions as has been seen in exams with policeman, paramedics, dentists and coast guards just to name a few. 


Case Study 9.2 – The High Cost of Ethical Neutrality


Carleton (Carly) Fiorina became the CEO of Hewlett-Packard (HP) in 1999.  She did this after getting her MBA, then being a sales superstar at AT&T/Lucent Technologies, and capped off by being named Fortune Magazine’s most powerful female American executive in 1998.  At HP, the Founders had put into place the “HP Way” (code of ethics focused on trusting employees, treating everyone with respect, sound finances, technical excellence, teamwork, thrift, humility, and hard work). 


In the late 1990’s profits dipped and Carly changed the “HP Way”.  She made three changes which were to go to a primary focus on financial performance instead of nurturing employees, salespeople were now paid on commission rather than salary, and the last was consolidating divisions to now be under her authority.  In 2002, HP merged with Compaq as morale and stock value continued to drop.  In 2005 Carly was fired going from the top to the bottom very fast mainly because she cared more about making the numbers then she did HP’s ethical standards.  


Case Study 9.3 – Agenda for Change at the Air Force Academy


US service academies strive to enroll the top high school students in nation who will hopefully be our next military leaders.  They follow codes that prohibit drinking, drug use, cheating, and breaking curfew.  In 2002 the Air Force had a case brought against academy officers for mishandling several cases of sexual assault.  Students that were raped were dropping out of school while potential rapists were being promoted.  Women cadets had higher grades then the men in many cases yet the amount of promotions was much higher for the men.  Many officers were fired after an investigation was done and the “Agenda for Change” was put into place.  These steps taken helped to decrease sexual crime and improve the school’s image.  A woman was put in charge of the academy for the first time, a sexual assault hotline was put into place, and advisors are assigned to those who report incidents.  Cadets also receive 70 hours of training on sexual assault, harassment, accountability, and substance abuse the moment that they walk onto campus.  There have been fewer incidents since the Agenda took place but sex crimes are still issues at the academy.