Ethical Leadership

BECG-4th Semester
 Eras of Leadership
 The Trait Leadership era (1880s-1940s):
Essential characteristics of leaders
 The Leadership Style era (1940s to 1960s): 2-
dimensional models of what leaders did, instead
of their inherent traits
 The Contingency Leadership era (late 1960s to
early 1980s): Complex style theories
incorporating situational variables
 The Transformational Leadership era (1980s to
date): (1)a drift from the trait, style and
contingency modes; (2) focus on leadership as a
socially constructed process of transformational
change
 Transformational Leadership
 Concept originated by James McGregor Burns
in his book Transforming Leadership (2003).
 Transactional leadership is inadequate for
analyzing the broader and deeper actions of a
leader. It is merely give-and-take leadership.
 Bernard Bass: “Quantitative changes are not
enough; they must be qualitative too”
 Transformation: fundamental, radical,
profound change in outward form directed by
inner character
 Different from pure “charismatic leadership”
 Must be (1) constructive and (2) mutually
empowering
 Transformational Leadership
 Transactional and transformational leadership
have different core assumptions. [Bass (1999)
found this through Multi-factor Leadership
Questionnaire (MLQ)]
 Transactional leadership: (1) a response to
followers’ immediate self-interests (2)
exchange relationship between leader and
follower is rooted in self-interest. Signifies first
order of change (of degree).
 Transformational leadership: (1) empowering
environment; (2) influence to go beyond
simple self-interests towards self-mastery; (3)
develops socially desirable behaviour in
followers. Higher order of change (of attitude,
beliefs, values)
 Transformational Leadership: The “4 Is”
Idealized influence Inspiration
2. envision a socially 2. set example of high
desirable future; performance standards;
3. articulate how to achieve 3. show determination and
it; confidence;
4. engender pride, respect, 4. model appropriate
trust in achievement. behaviour

Intellectual stimulation Individualized attention

2. help followers become 2. pay personal attention to
creative; developmental need of
3. challenge followers with followers;
new approaches and 3. give respect
ideas
 Transformational leader:
The 5th Level Leader [Collins and Porras]
 Talented individual: Works individually; the
individual is an isolated technical / professional
expert in a team
 Team collaborator: Has personal talents,
professional skills and team-working abilities
 Competent manager: Efficiently organizes
people towards pre-determined goals
 Effective leader: Promotes commitment to a
compelling vision coupled with high
performance standards
 Social navigator: Builds great companies
through exercise of personal humility, optimism,
moral courage and strong will power
 Why Ethical Leadership?
Competence vs. character
•Competence without character will result in
misconduct & failure
•Character without competence will result in
failure
•Leaders are developed through nurture, not by
nature alone.

Character & competence must be

developed simultaneously and continuously
 Warped Mind-set of “Fat-Cat” CEOs
 Insatiable desires of top CEOs have less to do with money
and more to do with the following:
u Poor self-image—low self-esteem; fills inadequacy by
building a “big” image
u “I deserve it” myth—need for all credit for firm’s success
u Unchecked fantasies—out of tune with reality; uses
money and power to gratify all desires and dreams
u Society’s blessing—belief that all is right with positive
financial results; often honoured as heroes by media
u Peer competition for remuneration—the sky is the limit
for salaries and perks
u Boredom—no idea of what to do next; invents new
challenges that invite moral disaster
u Corruptive power—insensitive to the rights and claims of
others when exercising power
u Lonesome soldier syndrome—difficulty in finding friends
because of the fear of losing power
 Ethical Leadership

 Leadership should not only make a

difference to others.

 Ethicalleadership makes a difference

to others by drawing on ethical
principles and values.
3 Leadership Perspectives—
R. E. Freeman
 Amoral

 Value-based

 Ethical
 The Amoral Leader

 Focuses on effectiveness.
 Often focuses on personal power and
the position of leadership.
 Is unconcerned about choices of the
followers.
 Values don’t count. Ethics don’t count.
Getting the job done counts.
 Very high human costs.
 The Values-based Leader
 Leads from personal values.
 Can be intensive and charismatic.

 Appeals to followers’ values and can

be incredibly powerful.
 Not always open to criticism and
reflection.
 In the extreme can become “cult-like”.
 The Ethical Leader
 Values and principles open to dialogue
and criticism.
 Leadership by choice of the followers.

 Followers and society taken as

important elements in guiding leader.
 Leader responsible for sound moral
judgment, sometimes challenging the
status quo.
Downsides of Unethical Leadership
 Disruption in routine operations
 Insecurity of employees

 Destruction of corporate reputations

 Loss of consumer confidence

 Termination of executive careers

 Loss of shareholder confidence

 Devastation of local communities

 Destruction of nature

 Propensity to external scrutiny

Seven Habits of Strong Ethical Leaders—
Steve Covey
1. strong personal character
2. passion to do right
3. proactive behavior
4. stakeholder interests in mind
5. recognition of their value as role
models
6. awareness that their decision making
should be transparent
7. holistic view of human beings and
firm’s ethical culture
 Greenleaf and “Servant Leadership”
 Greenleaf’s book (1977)—”Servant
Leadership: A Journey into the Nature of
Legitimate Power and Greatness”
 A leader is a “Servant first” attending to
the moral needs of followers. It begins
with the natural feeling that one wants
to “serve first”.
 Followers develop into autonomous and
morally responsible leaders themselves,
imbibing the ethical values of the servant
leader.
 “I will go; come with me; follow me”.
Think about Tenzing Norgay.
 “Wisdom Leadership”
 A wisdom leader aligns spiritual
consciousness with the physical,
intellectual and emotional energy to
manifest that choice as a daily mode of
living.
 Consciousness-driven wisdom leaders
are rooted in an invisible but strong
spiritual core
 Wisdom leaders are characterised by
the power to lead their own lower self
(i.e., vyavaharik vyaktitva) being
guided by their awakened Higher Self
(i.e., paramarthik vyaktitva).
 From Bottom-line Leader to Wisdom Leader
Attributes BOTTOM-LINE LEADERS WISDOM LEADERS

 pri oriti ze Ex pedi enc y Integrit y

 work wit h Priorit ies , structures and People, relat ions hi ps and
 create sy stems values
 foc us on Plans and strategi es Stat e of mi nd
 manage Gett ing Giv ing
 fav our Hum an ef fort (phy sical & Hum an energy , heart and
 work to ment al) spirit
 improv e Mai ntaining Developing
 ask Ac cept the stat us quo Chall enge t he status quo
 view Cont rol; perf ormance review ; Trust; recogniz ing
 ins pired by How and When contribut ion
Short range of the bot tom -line Why and What
Eff icienc y and the bot tom -line Long-range of cos mic well
being
Ques t for at taining higher
levels of cons cious nes s