Chapter 9: Ethical Leadership

two views: yes you will be corrupted other view there are a few things we can hold on too → character

Recall: Managing legitimacy

Utilitarian view and out of a self-interest perspective (also in dem Sinne, dass es für das Unternehmen besser ist es aus den Shelves zu nehmen, weil die langfristigen Konsequenzen schlimmer sein können) —> taking it out of the shelves Deontologian view —> not take out of the shelves

What did J&J leader do?

Johnson & Johnson’s leaders acted quickly (CEO James E. Burke, 1982)

• Pulled all Tylenol products off the shelves—31 million bottles worth over $100 million substantive alignment

• Stopped all production and advertising substantive alignment

• Partnered with the Chicago Police, FBI and FDA: perpetrator bought product,laced it with cyanide, and returned it to store shelves undetected stakeholder engagement

• Offered a $100,000 reward and provided detailed updates on its investigation and product developments following the crisis symbolic alignment

• Developed first-ever tamper-resistant packaging: “safety seal” that now covers the opening of most food and drug products was born substantive alignment/ stakeholder engagement

• Demonstration of normatively appropriate conduct throughpersonal actions and interpersonal relations

• Promotion of such conduct to followers through two-way communication, reinforcement, and decision-making

-       simultaneously a moral person and promote a type of conduct in the followers (implementing systems fördern ethical behaviour,…) → shows others what others have to do to be ethical

-       unethical leader —> aggressive towards. employees, unethical in decision-making, competitiveness,… → weak moral person and weak moral manager in the sense of engaging in unethical behaviour (forging financial reports)

-       weak moral person but strong moral manager: not very able to do the right thing, but instilling ethical behaviour in the operation —> hypocritical leader; example: respected by employees for instilling safety culture, but it was not so —> oil spill because of financial cuts in safety

-       silent leader: misses opportunity to show how he would act as a manager, someone who is morally strong but not Abel to show how he/she would react in a public ethical situation

• Obedience to authority: people derive psychological satisfaction from pleasing authority figures

• Conformity bias: people wish to fit in with their group

• Loss aversion: people will take unethical actions to avoid losses that they would not take to garner gains

-       Obedience of authority: psychological pleasure to obey to authority —> manager told something they did even if it was uncomfortable

-       Conformity bias: we like to fit in a group → landing in a unethical group we see it as reasonable

-       Loss Aversion: people engaging much more often in unethical behaviour because they want to avoid losing sth. → if you want to keep image of perfect leader = much easier/more likely to engage in unethical behaviour than if you want to get there (into a managing position)

—> does not happen to all of us, why are managers more open/tempted to engage in unethical behaviour/why are they more tested?

—> has to do with multiple psychological factors, why leaders are more challenged when they have power:

Overconfidence

Ken Lay at Enron“smartest guys in the room

Self-serving bias

Difficulty being objective when wellbeing or deeply rooted values are at stake

Moral license

People who have done something good, will allow themselves a little leeway

Bathsheba syndrome

Inability to cope with the by-products of success

Moral realization

Decide ethically-tinged issues quickly and resort to post-decision rationalizing

-       overconfident: think they are the smartest people in the room → engage in behaviour with out questioning if it is right or wrong

-       self-serving biases: only consider evidence that supports your opinion → is easier for leaders (people around you will probably tell you, what you want to hear) - either you promote this otherwise everyone will tell you how right you are

-       Moral license: feeling that people who have done so good things, they have amoral license to do sth. unethical or the other way around. Philanthropist for example do bad thigs

-       Bathsheba syndrome: inability to cope with the consequences of success → much more access to resources, to people, things,.. → resources of corporation for their … → can use as they see fit

-       moral realisation: ?

• Appreciate lack of invincibility: our inherent weaknesses and frailty

• Learn to be suspicious of gut feelings when placed in new, difficult situations

  • Opportunity for reflection

  • Bring viewpoints of others to question

• Recognize that we might not always even notice the choice that will lead us astray