Week SIX: The Role of Ethical Culture & Relationships and Ethical Leadership Flashcards
Define corporate culture
Corporate culture = a set of values, beliefs, goals, norms and ways of solving problems shared by members of an organisation (usually employees)
- A company’s history and unwritten rules are part of its culture and may be influenced by the founders values
Explain the two dimensions of organisational culture and the four organisational culture types
- Concern for people
- Organisation’s efforts to care for its employees wellbeing - Concern for performance
- Organisation’s efforts to focus on output and employee productivity - Apathetic: minimal concern for people/performance
- Caring: high concern for people, minimal concern for performance
- Exacting: minimal concern for people, high concern for performance
- Integrative: high concern for people/performance
Why is corporate culture important and what is the difference between a compliance-based and value-based culture?
- Corporate culture is a significant factor in ethical decision-making
- If a firm’s culture encourages/rewards unethical behaviour, encourages employees to act unethically
- Failure to manage or monitor its culture may foster questionable behaviour
- Leadership is the ability/authority to guide and direct others towards achieving goals
Compliance-Based Culture = legalistic approach to ethics
- Revolves around risk management, not ethics
- Lack of long-term focus and integrity
Value/Integrity-Based Culture = relies on mission statements that define the firm and stakeholder relations
- Focus on values, not laws
- Top down integrity critical
- hold employees accountable for practicing ethical behaviours
What is differential association?
Differential association
= the idea that people learn ethical/unethical behaviour while interacting with others
- Studies support that differential association supports ethical decision-making
- Superiors have strong influence on subordinates
- Employees may go along with superiors moral judgements to show loyalty
What is whistleblowing and how do you undertake it
Whistle-blowing = exposing an employer’s wrongdoing to company outsiders
- Some legal protections exist
Sarbanes-Oxley Act etc have institutionalised whistleblowing protections to encourage discovery of misconduct (as may fear retaliation)
HOW TO BLOW WHISTLE
- Approach immediate manager first
- Discuss issue with family
- Take to next level
- Contact company’s ethics office
- Consider going outside chain of command
- Go outside company
- Leave company
What is power and what are the types of power?
= Power refers to the influence that leaders and managers have over the behaviour and decisions of subordinates
- Control of resources, rewards and punishments
- Status: respect and admiration
Types of power
- Reward power: offering something desirable to influence behaviour
- Coercive power: penalising negative behaviour
- Legitimate power: consensus that a person has the right to exert influence over others
- Expert power: derives from knowledge and credibility with subordinates
- Referent power: exists when goals or objectives are similar
What is motivation and the what is the difference between intrinsic and extrinsic motivation?
Motivation is a force within the individual that focuses their behaviour towards achieving a goal
- Hierarchy of needs may influence motivation and ethical behaviour
needs/goals may change as a person progresses through company ranks - Intrinsic = doing something because it is inherently satisfying
- Extrinsic = doing something because it brings external reward (may promote unethical behaviour) - may crowd out/replace intrinsic motivation
How does decision-making differ between a centralised and decentralised organisastion?
= In centralised organisations, decision making authority is concentrated in the hands of top level managers and little authority is delegated to lower levels
- Considerable distance between employee and decision maker
- Little upward communication
- Blame-shifting
= In decentralised organisations, decision making authority is delegated as far down the chain of command as possible
- Have difficulty in responding quickly to changes in policy and procedure established by top management
- Profit centres within a decentralised organisation may deviate from organisational objectives
What is ethical leadership and what must good ethical leaders do?
= Leadership is the ability or authority to guide and direct others towards a goal
- Ethical leadership creates an ethical culture
- Have the power to motivate others and enforce the organisation’s norms, policies and viewpoints
- Many CEO’s articulate the firm’s core values but fail to exhibit ethical leadership
- > A leader must have follower’s respect and also provide a standard of conduct
- > A leader must have followers’ respect and also provide a standard of conduct
- Failure to demonstrate effective leadership qualities at the top creates the perception that managers either do not care about the company’s ethics program or feel they are above ethics and compliance requirements
- Actions of coworkers profoundly impacts the ethical decisions of employees
- As the project approached actual production, the engineers responsible for the components of the project ‘signed off’ to their immediate supervisors who in turn ‘signed off’ to their supervisors and so on up the chain of command until the entire project was approved for public release by Ford’s VP
What are the requirements for ethical leadership and the seven habits of strong ethical leaders
- Ethical leadership skills develop through years of training, experience and learning other best-practices of leadership
- Leadership qualities differ for each situation
- Ethical leaders must model organisational values
- Place what is best for the organisation over their own interests
- Train and develop employees throughout their careers
- Establish reporting mechanisms
- Understand employee values and perceptions
- Recognise the limits of organisational rules and values
Seven habits of strong ethical leaders
- Ethical leaders have strong personal character
- Ethical leaders have a passion to do right
- Ethical leaders are proactive
- Ethical leaders consider all stakeholders’ interests
- Ethical leaders are role models for the organisation’s values
- Ethical leaders are transparent and actively involved in decision-making
- Ethical leaders take holistic views on the firm’s ethical culture
What are the benefits of good ethical leadership?
- Directly impacts firm’s corporate culture
- Enhances ethical behaviour patterns when employees are rewarded for their ethical conduct
- Leads to employee satisfaction and commitment
- Creates strong relationships with external stakeholders
- Impacts the long-term market evaluation of the firm
What are the strategies for managing ethical conflict?
Ethical conflicts occur when there are two or more positions on an ethical decision
- Will not be brought to management’s attention without effective mechanisms for transparent communication
- Employees themselves should be trained to handle conflict situations
- Employees can respond to conflict in different ways -> ignore, confront, report, whistle blowing
Conflict management styles
- avoiding (low assertiveness, low cooperativeness)
- accommodating (low assertiveness, high cooperativeness)
- competing (high assertiveness, low cooperativeness)
- collaborating (high assertiveness, high cooperativeness)
What is the importance of empowering employees and how can managers achieve this?
- Employee empowerment is an essential component of a values-based organisational culture
- Encourages employees to express concerns, bring up ethical issues and take a proactive approach towards resolving conflict
- Ethical leadership training for both managers and employees is helpful
- Important in creating employee-centred ethical leadership
- Communication is essential, transparency and reporting are two major dimensions of ethical communication
- Create transparency by developing a culture where ethics is frequently discussed
- Reporting is a two-way process in which the communicator communicates with superiors and subordinates
Interpersonal
- Often difficult to communicate to a superior
- Provides an intimate opportunity for leaders and workers to give and receive information
Small group
- Can increase collaboration and generate a variety of perspectives on particular issue
- Group polarization - a group is more likely to move toward a more extreme position than members might have done individually
Non-verbal
- Communication expressed through actions, body language, expressions, or other forms of communication not written or oral
- Nonverbal cues are sometimes more reliable than what a person states verbally
Listening
- Without listening, communication becomes ineffective
- Good listening skills tend to establish credibility and trustworthiness with employees
What is a leader-follower relationship?
- Leader-follower congruence occurs when leaders and followers share the same vision, ethical expectations and objectives for the company
- Leader-follower communication connects followers with those in the company who are most familiar with the firm’s ethical values
- Leader-exchange theory claims that leaders form unique relationships with followers through social interactions
- > Important for ethical leaders to frequently communicate and interact with employees
What is the relationship between power difference and workplace politics
- Ethical leaders can mitigate power differences through frequent communication with workers
- Organisational politics is often perceived as trying to achieve one’s own ends even if it means harming others in the organisation
- > Gossip, manipulation, playing favourites, taking credit for another’s work
- There is a difference between having a high degree of office politics and good political skills
- > Political skills can be used to promote organisational goals and help rather than hinder other employees
