Ethical Leadership Examples

Ethical Leadership Examples

1. Hypocritical leader - Jim Bakker built 'Praise the Lord' ministries best public example- He talked about ethics, religion and claimed to be doing the'Lord's work' and earned $m's. He claimed would build two hotels. Would have been impossible to divide promised services to 68,000 members. Second hotel never finished. Funds donated for the projects were used to provide huge bonuses and salaries. But employees became aware of his deceptive financial practices, conflict of interest, lying to donors, theft. PTL filed for bankruptcy in 1987 - 3 months after Bakker had resigned. 1989 he was convicted on fraud and conspiracyy charges and spent 8 years in prison.

   • Hypocritical leader - makes people very cynical. Talks about integrity and ethical values but engages in unethical conduct. Encourages other people to act in an unethical conduct that only rewards the bottom line - don't discipline misconduct. Strong on communication but evidently not an ethical leader. Employees realise they can't trust what the leader says
   • 2nd example - Lord John Browne Former CEO BP. Launched a $200m 'Beyond Petroleum' campaign, to promote image as highly responsible company that would deliver performance and worker integrity (safety) and environmental concern. BP's texas plant exploded (killed 15 workers and injured many more) and two oil spills in Alaska. Employees and regulators witnessed cost-citting tactics. Beyond Petroleum was marketing tool - no action. Greenpeace awarded Lord Browne "Best Impression of Environmentalist" award and 2005, and he was forced to resign in 2007.
     • Message clear - if people are going to talk ethics and social responsibility - they need to follow through, else cosewquences worse

2. Unethical Leadership - unethical leaders can easily gain influence on the development of an unethical culture. In the matrix, unethical leaders have reputations as weak, moral pesons and weak moral managers

   • Example of unethical leader - Al Dunlap CEO Sunbeam. He became famous for turning struggling companies around. When hired he was considered a celebrity 'CEO' and share price increased by 49% in one day. While there, he was known for 'emotional abuse' of employees - being disrespectful and violent at times and throwing furniture. Demanded that all employees make numbers at cost. Dunlap lied to wall street, ensuring the firm was making projections and were capable of achieving higher sales figures. After 2 years, Dunlap couldn't hide the state of the business and he was fired by the board. Paid a $200,000 fine and agreed never to be a director of a public company again. Investigators learned Dunlap's fraudulent activity dates back to the 70's in no. of companies.

3. Ethical leaders - not strong leaders ethically or unethically,. Ethically 'neutral/ silent' Don't provide explicit leadership in area of ethics. Often leader doesn't realise how crucial executive ethical leadership is to the organisations ethical culture/ isn't comfortable talking about it or just don't care. Ethical leader isn't clearly unethical but is more self-centred than people orientated. On the moral manager dimension the ethically neutral leader is thought to focus more on the bottom line without setting complementary ethical goals. Little/ no message is coming form the top regarding ethics. Silence - important role. People in organisations perceive silence to mean lack of interest.

   • Ethically Neutral Leader - Sandy Weill, Former CEO Citigroup, before financial crisis Citigroup was defined a 'block buster money magazine' (Fortune magazine) Intense focus on the bottom line and Citigroup allegedly helped Enron to hide debt. In 2004, Japan shutdown Citigroup's private bank as had evidence of money laundering and sales of unstable products to customers. Company spent lots of time playing defense to the media, Weill claimed that his most important job was "to be sure that Citigroup operates at the highest level of ethics and with the utmost integrity". However - people were cynical about the statement. Weill exemplified ethically neutral leadership. He said the company was too big to 'micro-manage' and he relied on competent people - decentralised management system. If head of department thought ethics was important - got attention. So Weill sat on the sidelines. Previous CEO John Reed different approach - he recognised the importance of financial reputation
     • advocate for centralised ethics program with global reach. Weill stepped down in 2003
     • Links in with Carroll's Moral management model (1987)
       • Amoral Managers - neither moral or immoral but are not sensitive to the fact that their everyday decisions may have a disastrous effect on others. May lack ethical perspective in their organisations lives. Typically their orientation is to the 'letter of the law' as their ethical guide.

4. Being a moral person is not enough to be considered as a ethical leader. Being a moral person tells employees how the leader is likely to behave (doesn't tell them how the leader expects them to behave. Leaders much act as 'moral manager' - focus on 'leadership part of making ethics and values known.

5. Ethical Leader Example - James Burke Former CEO of J&J considered to be one of the most ethical leaders. In 1970's he challenged senior managers to review the credo and update - wasn't prepared to having it hanging on the wall i managers were not prepared to live by it. After discussion and disagreement around the world, the credo was revised - focus on customers. In 1982, Tylenol poisoning (drugs) occurred. The credo guided the company through the disaster. Burke introduced a credo survey process, where employees are asked about the companies performance regarding the credo - still done today and clear that people care about the credo and the values it represents.

   • Example 2 - Paul O'neill became CEO at Alcoa - had a reputation for worker safety. Alcoa already had enviable safety record at the time, but O'Neill created a goal of zero lost work days from accidents. When he visited the plants, he told employees that the co' was no longer going to budget for safety - if a haard was avoidable they would pay to fix it. Gave the workforce his home no. and told them to phone and report any accident within 24 hours so he could keep a record and find a solution. If people had been injured, he would get on a plane and go visit. After O'Neill retired, Alcoa continued to improve until it was the safest company in the world.