Ethical Issues in

Leadership and Management

• Leadership uses social influence to deliberately affect another person's
behavior
• Such changes in a person's behavior can happen without a person consciously deciding
to change
• Ethical issue: Are such efforts are an unethical manipulation of other people's
behavior?

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 Ethical Issues in
Leadership and Management (Cont.)
• Behavior changes may also change a attitudes, values, and
beliefs
• Example: move toward Quality Management and transform an
organization's values
• Individual employees may undergo similar changes
• Some observers suggest that leadership may have a
brainwashing-like effect on people

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 Ethical Issues in
Leadership and Management (Cont.)
• Qualities of ethical and unethical leaders
• Ethical leader
• Confronts moral dilemmas
• Rewards ethical behavior
• Builds an ethical organizational culture
• Transformational leaders
• Can get strong commitment to their vision from followers
• Can clearly have ethical or unethical results
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 Leader-Participation Model

Leader-Participation Model (Vroom and Yetton)

A leadership theory that provides a set of rules to
determine the form and amount of participative
decision making in different situations.

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•
• Show how framing influences leadership effectiveness.
• Define charismatic leadership and show how it influences followers.
• Contrast transformational with transactional leadership and discuss how transformational leadership
works.
• Define authentic leadership and show why ethics and trust are vital to effective leadership.
• Identify the three types of trust.
• Demonstrate the importance of mentoring, self-leadership, and virtual leadership to our understanding
of leadership.
• Identify when leadership may not be necessary.
• Explain how to find and create effective leaders.
• Assess whether charismatic and transformational leadership generalizes across cultures.

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 Inspirational Approaches to Leadership
• The focus is leader as communicator
• Framing:
• A way of communicating that shapes meaning
• Selective highlighting of facts and events
• Ignored in traditional leadership studies
• Two contemporary leadership theories:
• Charismatic Leadership
• Transformational Leadership
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 Charismatic Leadership
• House’s Charismatic Leadership Theory:
• Followers make attributions of heroic or extraordinary leadership abilities when they observe certain behaviors
• Four characteristics of charismatic leaders
• Have a vision
• Are willing to take personal risks to achieve the vision
• Are sensitive to follower needs
• Exhibit behaviors that are out of the ordinary
• Traits and personality are related to charisma
• People can be trained to exhibit charismatic behaviors
Exhibit 13.1

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 How Charismatic Leaders Influence Followers
• A four-step process:
1. Leader articulates an attractive vision
• Vision Statement:
A formal, long-term strategy to attain goals
• Links past, present, and future

2. Leader communicates high performance expectations and confidence in follower ability

3. Leader conveys a new set of values by setting an example
4. Leader engages in emotion-inducing and often unconventional behavior to demonstrate
convictions about the vision
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 Charismatic Leadership Issues
• Importance of vision
• Must be inspirational, value-centered, realizable, and given with superior imagery and articulation
• Charismatic effectiveness and situation
• Charisma works best when:
• The follower’s task has an ideological component
• There is a lot of stress and uncertainty in the environment
• The leader is at the upper level of the organization
• Followers have low self-esteem and self-worth
• Dark Side of Charisma
• Ego-driven charismatics allow their self-interest and personal goals to override the organization’s goals
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 Beyond Charisma: Level-5 Leaders
• Very effective leaders who possess the four typical leadership traits:
• Individual competency
• Team skills
• Managerial competence
• Ability to stimulate others to high performance
• Plus one critical new trait…
• A blend of personal humility and professional will
• Personal ego-needs are focused toward building a great company
• Take responsibility for failures and give credit to others for successes
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Transactional and Transformational Leadership
• Transactional Leaders
• Leaders who guide or motivate their followers in the direction of
established goals by clarifying role and task requirements
• Transformational Leaders
• Inspire followers to transcend their own self-interests for the good of
the organization; they can have a profound and extraordinary effect on
followers
• Not opposing, but complementary, approaches to leadership
• Great transformational leaders must also be transactional; only one type
is not enough for success
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 Characteristics of the Two Types of Leaders
Transactional
• Contingent Reward:
• Contracts exchange of rewards
for effort, promises rewards for
good performance, recognizes
accomplishments
• Management by Exception:
• Active: Watches and searches
for deviations from rules and
standards, takes corrective action
• Passive: Intervenes only if
standards are not met
• Laissez-Faire:
• Abdicates responsibilities, avoids
making decisions
Transformational
• Idealized Influence:
• Provides vision and sense of
mission, instills pride, gains respect
and trust
• Inspiration:
• Communicates high expectations,
uses symbols to focus efforts,
expresses important issues simply
• Intellectual Stimulation:
• Promotes intelligence, rationality,
and problem solving
• Individualized Consideration:
• Gives personal attention, coaches,
advises
Exhibit 13-2 13-
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 Full Range of Leadership Model
• Leadership styles listed from passive to very active
• Note the ineffective styles are mostly transactional
• It is all about influencing followers

Exhibit 13-3

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 Issues with Transformational Leadership
• Basis for Action:
• Transformational leadership works by encouraging followers to be more innovative and
creative and by providing ambitious goals
• Evaluation Based on the Research:
• This theory does show high correlations with desired outcomes
• This style of leadership can be taught
• Transformational vs. Charismatic Leadership:
• Similar concepts, but transformational leadership may be considered a broader concept
than charisma
• Instrument-based testing shows the measures to be roughly equivalent
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 Authentic Leadership: Ethics and Trust
• Authentic Leaders:
• Ethical people who know who they are, know what they believe in and value, and act
on those values and beliefs openly and candidly
• Primary quality is trust
• Build trust by:
• Sharing information
• Encouraging open communication
• Sticking to their ideals
• Still a new topic; needs more research
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 Ethics, Trust, and Leadership
• Ethics touch on many leadership styles
• As the moral leaders of organizations, CEOs must demonstrate high ethical standards
• Socialized charismatic leadership: leaders who model ethical behaviors
• Trust:
• The positive expectation that another person will not act opportunistically
• Composed of a blend of familiarity and willingness to take a risk
• Five key dimensions: integrity, competence, consistency, loyalty, and openness
Exhibit 13-4
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 Five Key Dimensions of Trust
• Integrity
• Honesty and truthfulness
• Competence
• An individual’s technical and interpersonal knowledge and skills
• Consistency
• An individual’s reliability, predictability, and good judgment in handling situations
• Loyalty
• The willingness to protect and save face for another person
• Openness
• Reliance on the person to give you the full truth

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 Three Types of Trust
• Deterrence-based Trust
• Trust based on fear of reprisal if the trust is violated
• Knowledge-based Trust
• Trust based on behavioral predictability that comes from a history of interaction
• Identification-based Trust
• Trust based on a mutual understanding of one another’s intentions and appreciation of
the other’s wants and desires

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 Basic Principles of Trust
• Mistrust drives out trust
• Trust begets trust
• Trust can be regained
• Mistrusting groups self-destruct
• Mistrust generally reduces productivity
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 Contemporary Leadership Roles: Mentoring
• Mentor:
• A senior employee who sponsors and supports a less-experienced employee (a protégé)
• Good teachers present ideas clearly, listen, and empathize
• Two functions:
• Career
• Coaching, assisting, sponsoring
• Psychosocial
• Counseling, sharing, acting as a role model
• Can be formal or informal
• Mentors tend to select protégés who are similar to them in background: may restrict minorities and
women

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 Contemporary Leadership Roles: Self-
Leadership
• Self-Leadership
• A set of processes through which individuals control their own behavior
• Effective leaders “superleaders” help followers to lead themselves
• Important in self-managed teams
• To engage in self-leadership:
1. Make a mental chart of your peers and colleagues
2. Focus on influence and not on control
3. Create opportunities; do not wait for them
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 Contemporary Leadership Roles: Online
Leadership
• Leadership at a Distance: Building Trust
• The lack of face-to-face contact in electronic communications removes the nonverbal
cues that support verbal interactions.
• There is no supporting context to assist the receiver with interpretation of an electronic
communication.
• The structure and tone of electronic messages can strongly affect the response of
receivers.
• An individual’s verbal and written communications may not follow the same style.
• Writing skills will likely become an extension of interpersonal skills.
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 A Challenge to the Leadership Construct
• Attribution Theory of Leadership
• The idea that leadership is merely an attribution that people make about other
individuals
• Qualities Attributed to Leaders:
• Leaders are intelligent, outgoing, have strong verbal skills, are aggressive, understanding, and
industrious.
• Effective leaders are perceived as consistent and unwavering in their decisions.
• Effective leaders project the appearance of being leaders.
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Another Challenge to the Leadership Construct
• Substitutes and Neutralizers for Leadership
• Exhibit 13.5
Relationship- Task-
oriented oriented
Defining Characteristics Leadership Leadership
Individual
Experience/training No effect on Substitutes for
Professionalism Substitutes for Substitutes for
Indifference to rewards Neutralizes Neutralizes

Job
Highly structured task No effect on Substitutes for
Provides its own feedback No effect on Substitutes for
Intrinsically satisfying Substitutes for No effect on

Organization
Explicit formalized goals No effect on Substitutes for
Rigid rules and procedures No effect on Substitutes for 13-
Cohesive work groups Substitutes for Substitutes for 171
 Finding and Creating Effective Leaders
• Selection
• Review specific requirements for the job
• Use tests that identify personal traits associated with leadership, measure self-monitoring, and assess
emotional intelligence
• Conduct personal interviews to determine candidate’s fit with the job
• Keep a list of potential candidates
• Training
• Recognize that all people are not equally trainable
• Teach skills that are necessary for employees to become effective leaders
• Provide behavioral training to increase the development potential of nascent charismatic employees
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 Global Implications
• Certain types of leadership behaviors work better in some cultures than in
others
• Charismatic/Transformational Leadership
• Seems to work across cultures
• May be an “universal” aspect of leadership in its focus on:
• Vision and foresight
• Providing encouragement
• Trustworthiness
• Dynamic, positive, and proactive traits
• Globalization may be the cause of these common concerns – we may be
able to train a “universal” manager, if that person is culturally sensitive!
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 Summary and Managerial Implications
• Companies are looking for transformational leaders – even if they only “look
the part”
• Transformational style crosses borders reasonably well
• Effective managers must build trust with those they lead
• Leadership selection and training are important to long-term success

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 Define leadership and contrast
leadership and management
 Leadership is the ability to influence a group toward the
achievement of a vision or set of goals.
 Not all leaders are managers nor are all managers leaders.
 Nonsanctioned leadership is often as important or more
important than formal influence.

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 Define leadership and contrast
leadership and management
 Strong leadership and strong management are needed for
optimal effectiveness.
 Leaders are needed today to challenge the status quo,
create visions of the future, and inspire organizational
members to want to achieve the visions.
 Managers formulate detailed plans, create efficient
organizational structures, and oversee day-to-day
operations.

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Compare and contrast charismatic and
transformational leadership

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Compare and contrast charismatic and
transformational leadership
• Training individuals for charismatic behavior.
• A three-step process is suggested.
• Develop the aura of charisma by maintaining an optimistic view;
using passion as a catalyst for generating enthusiasm; and
communicating with the whole body, not just with words.
• Creating a bond that inspires others to follow.
• Brings out the potential in followers by tapping into their emotions.

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Compare and contrast charismatic and
transformational leadership
• The Dark Side of Charismatic Leadership
• Don’t necessarily act in interest of companies.
• Many have allowed their personal goals to override the goals of the
organization.
• Research has shown that individuals who are narcissistic are also
higher in some behaviors associated with charismatic leadership.
• Some charismatic leaders are too successful convincing followers
to pursue a vision that can be disastrous.

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Compare and contrast charismatic and
transformational leadership

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Compare and contrast charismatic and
transformational leadership

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 Compare and contrast charismatic and
transformational leadership
• Creativity, theirs and others.
• Decentralization of responsibility.
• Propensity to take risks.
• Compensation is geared toward long-term results.
• Greater agreement among top managers about the
organization’s goals.
• Increase follower self-efficacy, giving the group a “can do”
spirit.
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 Compare and contrast charismatic and
transformational leadership

• Transformational leadership has been impressively

supported at diverse job levels and occupations (school
principals, teachers, marine commanders, ministers,
presidents of MBA associations, military cadets, union shop
stewards, sales reps).

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 Compare and contrast charismatic and
transformational leadership
• Transformational leadership isn’t equally effective in all
situations.
• It has a greater impact on the bottom line in smaller,
privately held firms than in more complex organizations.
• It may be more effective when leaders can directly interact
with the workforce and make decisions than when they
report to an external board of directors or deal with a
complex structure.

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 Compare and contrast charismatic and
transformational leadership
• The GLOBE study—of 18,000 leaders from 825
organizations in 62 countries—links a number of elements
of transformational leadership with effective leadership,
regardless of country.
• This conclusion is very important because it disputes the
contingency view that leadership style needs to adapt to
cultural differences.

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 Define authentic leadership and
show why effective leaders
exemplify ethics and trust
• Authentic Leadership
• Leaders know who they are
• Know what they believe in and value
• Act on those values and beliefs openly and candidly

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 Define authentic leadership and
show why effective leaders
exemplify ethics and trust
• Ethics and Leadership
• Transformational leaders foster moral virtue when they try to
change the attitudes and behaviors of followers.
• Unethical leaders use their charisma to enhance power over
followers, directed toward self-serving ends.
• An example, when leaders give themselves large bonuses while
they seek to cut costs by laying off long-time employees.

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 Define authentic leadership and
show why effective leaders
exemplify ethics and trust
• Trust is a psychological state that exists when you agree to
make yourself vulnerable to another because you have
positive expectations about how things are going to turn
out.
• Trust is a primary attribute associated with leadership.
• When trust is broken, it can have serious adverse effects
on a group’s performance.

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Define authentic leadership and
show why effective leaders
exemplify ethics and trust

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 Define authentic leadership and
show why effective leaders
exemplify ethics and trust
• What Are the Consequences of Trust?
• Trust Encourages Taking Risks
• Trust Facilitates Information Sharing
• Trusting Groups Are More effective
• Trust Enhances Productivity

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Demonstrate the role mentoring
plays in our understanding of
leadership

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 Demonstrate the role mentoring
plays in our understanding of
leadership
• You might assume mentoring is valuable for objective
outcomes like compensation and job performance, but
research suggests the gains are primarily psychological.
• Mentors may be effective not because of the functions
they provide, but because of the resources they can
obtain.
• Most evidence suggests that network ties, whether built
through a mentor or not, are a significant predictor of
career success.
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 Address challenges to the
effectiveness of leadership

• Much of an organization’s success or failure is due to factors

outside the influence of leadership. In many cases, success or
failure is just a matter of being in the right or wrong place at a
given time.
• The attribution theory of leadership says leadership is merely an attribution people make
about other individuals.

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 Address challenges to the
effectiveness of leadership

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 Address challenges to the
effectiveness of leadership

• Online Leadership
• Needs research.
• Today’s managers and employees are increasingly linked by networks
rather than geographic proximity.
• Online leaders have to think carefully about what actions they want
their digital messages to initiate.
• Writing skills are likely to become an extension of interpersonal skills.

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 Address challenges to the
effectiveness of leadership
• Selecting Leaders
• Items of consideration during selection include:
• Review specific requirements for the position.
• Personality tests can identify traits.
• High self-monitors are better at reading. situations and adjusting.
• High emotional intelligence should have advantage.
• Experience is poor predictor of effectiveness.

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 Address challenges to the
effectiveness of leadership
• Training Leaders
• Successful with high self-monitors more than low.
• Train people to develop “an understanding about content
themes critical to effective visions.”
• Teach skills such as trust building, mentoring, and
situational-analysis skills.
• Behavioral training can increase an individual’s ability to
exhibit charismatic leadership qualities.
• Finally, leaders can be trained in transformational
leadership skills that have bottom-line results.
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 Summary and Implications for
Managers

• Knowing what makes a good leader should thus be valuable

in improving group performance.
• Search for universal leadership traits failed.
• Behavioral approach’s contribution was narrowing leadership into task-
oriented (initiating structure) and people-oriented (consideration)
styles.
• Research leadership has made contributions to our understanding of
leadership effectiveness.
• Tests and interviews help identify people with leadership qualities.
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