4.

TRUST AND ETHICAL LEADERSHIP

Unit 4
www.kuru.in/ethics

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 Social Contract Theory
• New Beginning in Mars
• Thomas Hobbes (1588-1679)
• John Locke (1632–1704)
• Immanuel Kant (1724-1804)
• Jean-Jacques Rousseau
(1712-78)
• John Rawls (1921 – 2002)
• Max Weber (1864 – 1920)
Corporate Cases n Scandals
• The man who sold the Eiffel Tower
• Bernard Madoff Ponzi Scheme
• (The Enron Scandal)
• (WorldCom Scandal)
• Satyam Scandal: India's Enron
• Rishi Sunak
• Theranos n Elizabeth Holmes
• (Sam Bankman-Fried and Futures
Exchange, FTX, Scandal)
• (Lehman Brothers)
1. Moral Leadership (John W. Gardner and James McGregor Burns)
2. Moral Reasoning and Character-Based Leadership (Trolly Problem)
3. Character-Based Leadership: Authentic Leadership
4. Character-Based Leadership: Servant Leadership
5. Heroic Leadership: Energising Oneself for a Greater Cause – Jesuit Story
6. Conclusion: Challenge to Be Genuine Leader
7. Ethical Climate (3 Caselets)

• Appendix
• Trustworthiness
• The Pygmalion Effect or Self-Fulfilling Prophecy
• Disciplining without Humiliating
• Machiavellianism: Strategic and Manipulative Behaviour
• Dealing with an Unethical Boss
• Whistleblower Policy: Promoting Ethics and Accountability in Organizations
1. Moral Leadership (John W. Gardner and James McGregor Burns)

• Scandals involving CEOs

• Leaders and managers (doing the right things vs doing things right)
• Leaders concerned mostly with their own advancement do not inspire
selflessness
• centrality and importance of the moral dimension of leadership.
• leaders should always treat others as ends in themselves, not as objects
or mere means to the leader’s ends (Kant)
• John W. Gardner (On Leadership, 1990) and James McGregor Burns
(Leadership, 1978) have stressed the centrality and importance of the
moral dimension of leadership
1. John W. Gardner (1912-2002) A Champion
of Ethical Leadership
American scholar, public servant, and author, who significantly contributed to the study and practice of leadership
• Public Service: Served as Secretary of Health, Education, and Welfare under President Lyndon B. Johnson &
Founder of Common Cause, a nonpartisan citizens' advocacy group
• Emphasis on Ethical Leadership: Leaders should have a strong sense of purpose and a commitment to the greater
good
• Forward-Thinking Leadership: Effective leaders should be forward-thinking & They should have a vision for
positive change
Key Work: "On Leadership" (1990): One of Gardner's most influential works
• Discusses qualities and responsibilities of leadership
• Offers practical advice and thought-provoking reflections
• Highlights that leadership is not limited to formal positions of power
• Anyone willing to take initiative can make a difference
Closing Thoughts: John W. Gardner's legacy in leadership studies continues to inspire and guide leaders in various
sectors & His emphasis on ethics, purpose, and positive change remains relevant today
1. Moral Leadership: James MacGregor
Burns (1918-2014)
• American historian, political scientist, and distinguished scholar
known for his significant contributions to the study of leadership and
political theory.
• Widely regarded as one of the most influential political thinkers of the
20th century.
• Burns' most notable work is his groundbreaking book titled
"Leadership" (1978). In this book, he introduced a transformative and
comprehensive theory of leadership, distinguishing between two types
of leaders: transactional and transformational leaders.
1. Burns: Two Types of Leadership
1.Transactional Leadership: Burns defined transactional leadership as a form of exchange-
based leadership, where leaders offer rewards or punishments to their followers in
exchange for compliance and performance. It is essentially a "give and take" approach
to leadership, where both parties engage in a mutually beneficial relationship.
2.Transformational Leadership: In contrast, transformational leadership goes beyond the
transactional model. Transformational leaders inspire and motivate their followers by
appealing to their higher ideals and moral values. They seek to elevate the collective
vision and purpose, encouraging followers to achieve extraordinary outcomes and
growth.
• Burns argued that transformational leadership has a more profound and lasting impact
on followers and society, leading to positive social change and collective advancement.
He emphasized the importance of moral leadership and the need for leaders to be guided
by ethical principles.
1. James MacGregor Burns (1918-2014)
• Leaders who do not behave ethically do not
demonstrate true leadership
• At a minimum, leadership is characterized by a
high degree of trust between leader and
followers.
• They engender trust with compelling vision,
empathy, consistency, and integrity
1. Douglas McGregor: Theory X and Theory
Y
• Theory X: Managers with this orientation rely heavily on
coercive, external control methods to motivate workers, such as
pay, disciplinary techniques, punishments, and threats. They
assume people are not naturally industrious or motivated to
work.
• Theory Y, by contrast, reflects a view that most people are
intrinsically motivated by their work. Rather than needing to be
coaxed or coerced to work productively, such people value a
sense of achievement, personal growth, pride in contributing to
their organization, and respect for a job well done.
1. Appreciating Honesty
• Peter Jackson, director of the Lord of the Rings:
“Well, I just find that most people appreciate
honesty. I find that if you try not to have any
pretensions and you tell the truth, you talk to them
and you treat them as collaborators, I find that
studio people are usually very supportive.”
1. Moral Leadership: Values
• Values are “constructs representing generalized behaviors or
states of affairs that are considered by the individual to be
important.”
• Patrick Henry said, “Give me liberty, or give me death” 
value of political freedom
• Your values determine your action
• If “sense of duty” were more important VALUE to the person
than “getting ahead,” then she would be more likely to speak
up than if the reverse were true.
2. DANGER of making small compromises
• Clay Christensen (an expert in business innovation)
• played on the Oxford University basketball team
• Their championship game would be played on a Sunday
• An exception: “Just this one”
• The point he was making to his Harvard students was that, as
counterintuitive as it might seem, it is easier to stick to your values 100
percent of the time than it is to stick to them 98 percent of the time.

• Substance abuse
• Incrementalism
• “Question authority, but raise your hand first.” Bob Thaves, cartoonist
2. Moral Reasoning and Character-Based
Leadership
• Moral reasoning refers to the process leaders use to make decisions
about ethical and unethical behaviors. It does not refer to the
morality of individuals per se, or their espoused values, but rather to
the manner by which they solve moral dilemmas.
• Of course, not everyone fully develops their moral judgment. For
example, research suggests that whereas most people believe they
behave ethically, there is considerable reason to believe that they are
significantly more biased than they think
• research suggests that the psychological processes involved are more
complicated than you might imagine.
2. Moral Reasoning and Character-Based
Leadership
• Philosophers such as Plato and Kant believed mature moral judgment
to be an essentially rational process whereas other philosophers, such
as David Hume and Adam Smith, believed that emotions are at the
heart of moral judgment (no pun intended!).
• Joshua Greene, a Harvard psychologist proposed a dual-process
theory of moral judgment wherein moral judgments dealing primarily
with “rights” and “duties” are made by automatic emotional
responses whereas moral judgments made on a more utilitarian basis
are made more cognitively
The Trolley Problem
Footbridge Dilemma
• Will you yourself jump down,
sacrifice your life and save the
five of them? Am I obliged to
do?
• Maximilian Kolbe
2. Moral Dilemmas for a Leader

1. Truth versus loyalty

2. Individual versus community
3. Short term versus long term
4. Justice versus mercy
2. American Ethicist Rushworth
Kidder offers three principles for
resolving

1. Ends-based thinking
(Utilitarianism)
2. Rule-based thinking
(Deontology)
3. Care-based thinking (EoC)
4. (Virtue Ethics)
5. (Golden Rule)
2. Moral Reasoning and Character-Based
Leadership: Four Particular Biases
1. Implicit prejudice
2. In-group favoritism
3. Overclaiming credit [“Are you one of the top 10 percent of
performers in your company?”]
4. Conflicts of interest

• Complete answer lies not only in enhancing ethical and moral reasoning
but also in approaches that enhance people’s awareness of their ways of
construing or constructing moral dimensions of any situation.
2. Moral Reasoning and Character-Based Leadership:
Critical Elements of Ethical Leadership
 Knowledge of leadership and ethics to provide a conceptual
framework for understanding the practice of ethical leadership
 Opportunities to practice leadership roles requiring collective
action where the learner has some responsibility for outcomes
that matter to others
 Opportunities to study, observe, and interact with leaders,
especially those who have demonstrated moral courage
2. Moral Reasoning and Character-Based Leadership:
Critical Elements of Ethical Leadership
 Formal and informal assessment of the efforts of those learning to
lead ethically
 Feedback to the learner, and opportunities for the learner to reflect on
that feedback
 Strengthening the learner’s personal ethics and core values
 Inspiring employees to think of themselves as leaders and to accept
leadership roles and responsibilities, including those who had not
previously thought of themselves as leaders
2. Values-Predictions-Behaviour
• Ryan Brown found that
although their
predictions were Personal Values

generally consistent
with their personal ≠
≈
values, their actual
behavior often was not.
Predictions Behaviour
≠
2. Become more self-conscious of one’s own
ethical standards and Practices: Questions
 How do I decide ethical dilemmas?
 Do I have set ethical beliefs or standards?
 If so, do I live by these beliefs or standards?
 How often have I done something that I am ashamed of?
 How often have I done things that I am proud of?
 Do I admit my mistakes?
2. Become More Self-conscious of One’s
Own Ethical Standards and Practices
 What do I do to correct mistakes that I make?
 Do I often put the well-being of others ahead of mine?
 Do I follow the Golden Rule?
 Am I honest?
 Do people respect my integrity?
2. Become More Self-conscious of One’s
Own Ethical Standards and Practices
 What are the three best things that have ever happened to me?
 What is the most dishonest thing I have ever done?
 Did I ever rectify the situation?
 What is the most honest thing I have ever done?
2. Moral Reasoning and Character-Based
Leadership: Hannah & Avolio’s Moral Potency
 Moral ownership: A felt sense of responsibility not only for the ethical nature of
one’s own behavior but also for one’s commitment not to allow unethical things
to happen within their broader sphere of influence including others and the
organization.
 Moral courage: The fortitude to face risk and overcome fears associated with
taking ethical action.
 Moral efficacy: Belief or confidence in one’s capability to mobilize various
spersonal, interpersonal, and other external resources to persist despite moral
adversity.
2. Moral Reasoning and Character-Based
Leadership: Reputation and Trust

• “It takes many good deeds to build a good reputation, and only one
bad one to lose it.” Benjamin Franklin
• “It takes 20 years to build a reputation and five minutes to ruin
it. If you think about that, you'll do things differently.” Warren
Buffett
3. Character-Based Approaches to
Leadership: Authentic Leadership
• Moral person and moral manager
• The moral person is seen as a principled decision maker who cares
about people and the broader society. The actions of such people
indicate they try to do the right things personally and professionally,
and they can be characterized as honest, fair, and open.
• moral managers “make ethics an explicit part of their leadership
agenda by communicating an ethics and values message, by visibly
and intentionally role modeling ethical behavior.”
• Not value-free in pursuit of “objectivity” as it was considered earlier
3. Character-Based Approaches to
Leadership: Authentic Leadership
• “To thine own self be true.”
• “The most important thing in acting is honesty. Once you’ve learned
to fake that, you’re in.” Samuel Goldwyn
• humanistic movement in psychology including Maslow’s theory of
self-actualization and
• Carl Rogers’s concept of the fully functioning person.
3. Character-Based Approaches to
Leadership: Authentic Leadership
• Central to both Maslow’s and Rogers’s theories is the idea that
individuals can develop modes of understanding and interacting with
their social environments so as to become more truly independent of
others’ expectations of them (individual, group, and cultural) and
guided more by the dictates of universal truths and imperatives.
• Manifest congruence between how they feel on the inside and how
they act, between what they say and what they do
3. Authentic Leadership
• Realistic self-perceptions, free from the blind
spots and misperceptions of self that are
common to most people. At the same time, they
are accepting of themselves, their nature, and
that of others too
• Authentic leaders have strong ethical convictions
that guide their behavior not so much to avoid
doing “wrong” things as to always try to do the
“right” things
• Treating others with respect and dignity.
3. Authentic Leadership
• As Avolio puts it, authentic leaders both are
self-aware and self-consciously align their
actions with their inner values
• Authenticity as a leader is something that you
must always be striving to enhance. It requires
regularly identifying with your best self,
checking in with your core values concerning
your leadership agendas and operating
practices, and verifying that your actions are
aligned with the highest ethical and moral
principles you hold
3. Inauthentic leadership
• Plays a role, or puts on different acts with different audiences
to manage their impressions
• Exaggerates his anger at an employee’s mistake to “teach a
lesson”
• Denies that her feelings were affected by critical feedback
from her direct reports is being inauthentic
Authentic leaders believe that…
1. Enhancing self-awareness can help people in organizations find more meaning
and connection at work;
2. Promoting transparency and openness in relationships—even between leader and
followers—builds trust and commitment; and
3. Fostering more inclusive structures and practices in organizations can help build
more positive ethical climates.
• In contrast to stereotypical notions of the stoic “hero leader” who shows no
weakness and shares no feelings, authentic leaders are willing to be viewed as
vulnerable by their followers— a vital component of building a trusting leader–
follower relationship.
• Equally important to building trust is a leader’s willingness to be transparent—in
essence, to say what she means and mean what she says.
3. Authentic Leadership
• Major review of the scholarly literature on authentic leadership
concluded by noting that the “assumption of authentic leadership
theory that people in organizations can effectively lead, and follow, in
a way that enables them to express their own unique identity and style,
has created a sense of excitement among leadership scholars and
practitioners.”

• Will Humility and Authenticity Get You to the Top? Highlight 5.5
4. Character-Based Approaches to
Leadership: Servant Leadership
• 1970s
• Robert Greenleaf was inspired by short novel by Herman Hesse Journey to the
East. (Hesse’s other book Siddhartha)
• The mythical story of a group of people on a spiritual quest. Accompanying the
party is a servant by the name of Leo, whose nurturing character sustained the
group on its journey until one day he disappeared. The group fell apart and
abandoned its quest when it realized that it was helpless without its servant

• Greenleaf Center for Servant Leadership (earlier called the "Center for Applied
Ethics").
• https://en.wikipedia.org/wiki/Robert_K._Greenleaf
4. Characteristics of Servant Leader
(Like Authentic Leadership)
 Listening: While all leaders need to communicate effectively, the focus is often
on communicating to others; but servant leadership puts the emphasis on
listening effectively to others.
 Empathy: Servant leaders need to understand others’ feelings and perspectives.
 Healing: Servant leaders help foster each person’s emotional and spiritual health
and wholeness.
 Awareness: Servant leaders understand their own values, feelings, strengths, and
weaknesses.
4. Characteristics of Servant Leader
 Persuasion: Rather than relying on positional authority, servant
leaders influence others through their persuasiveness.
 Conceptualization: Servant leaders need to integrate present realities
and future possibilities.
 Foresight: Servant leaders need to have a well-developed sense of
intuition about how the past, present, and future are connected.
 Stewardship: Servant leaders are stewards who hold an organization’s
resources in trust for the greater good.
4. Characteristics of Servant Leader
• Commitment to others’ growth: The ultimate test of a servant leader’s work is
whether those served develop toward being more responsible, caring, and
competent individuals.
• Building community: Such individual growth and development is most likely to
happen when one is part of a supportive community. Unfortunately numerous
factors like geographic mobility and the general impersonal nature of large
organizations have eroded people’s sense of community
• Taken to the extreme, this model, like other may be counterproductive. They can
backfire. Perhaps not surprisingly, extreme forms of any approach to leadership
may be losing credibility.
4. Do “Nice Guys” Finish Last?
• Bullying behavior by athletic coaches. According to the SI article, 31 percent of
Division I basketball players and 22 percent of football players reported that a
coach “puts me down in front of others.”
• Only 39 percent of women’s basketball players agreed that “my head coach can be
trusted.”
• As increasing evidence indicates, the bullying style doesn’t actually work.
• Bullying coaches were probably successful in spite of their bullying behavior, not
because of it.
• Research from the field of sports psychology indicates that athletes perform best
in an environment in which they are respected and valued
• An environment tends to make people “more flexible, resilient, and creative.”
4. Criticism of Servant Leadership
• Servant leaders develop people, helping them to strive and flourish. Servant
leaders want those they serve to become healthier, wiser, freer, and more
autonomous. Servant leaders serve followers (not the organization or
stockholders).
• But managers are hired to contribute to organizational goal attainment. It would
seem that these goals can be attained only by having subordinates (not followers)
solving tasks that lead to productivity and effectiveness.
• Productivity and effectiveness, however, may not be inherently incompatible with
servant leadership.
• Empathy can be emotionally exhausting; with its own limits
4. Servant Leadership: Overview
• The theory of servant leadership emphasizes people development and serving followers.
• Organizational managers are often tasked with achieving goals through task completion.
• Potential Conflict: Idealized servant leadership vs. organizational goals.
Benefits of Servant Leadership: Positive impacts on organizational outcomes:
• Increased trust among employees and stakeholders.
• Reduced customer turnover.
• Enhanced employee satisfaction.
Challenges in Implementing Servant Leadership:
• Empathy dilemma: How much empathy should leaders show?
• Emotional toll: Being empathetic can be emotionally draining.
• Self-limitation: Excessive empathy may limit assertiveness and decision-making.
• Ethical concerns: Overlooking transgressions in others.
Reconciliation is Key:
• Balancing servant leadership principles with organizational effectiveness.
• Requires careful consideration of how to integrate empathy and leadership within the organizational context.
Type Characteristics

Coach Motivation, Encouragement, Personal Attention

Types of leadership
Visionary Focussed, Inspirational, Larger interests
Autocratic Authoritarian, Result-oriented, Disciplinarian

Laissez-faire Delegatory, Non-involved “Anything goes”

Democratic Supportive, Innovative Empowering
• Robert Op
Pacesetter Helpful, Motivational, Gives freedom to grow

Transformational Challenging, Communicative, Demanding

Transactional Performance-focussed, Clear, demands Flexibility

Bureaucratic Hierarchical, Duty-focussed Rigid

Servant Humble, Helpful, Protects and promote
 Characteristics of Servant Leader
Visionary Conceptualising Overall vision; Foresight and planning
Selfless Helping followers first Putting them first; Enabling and
Empowering

Good Communication Good listener; Emotional Healing; Criticism with compassion

Stewardship Loyalty; Ethical Behaviour; Socially Responsible

Person of Integrity Humility, Gentleness, Compassion and commitment
Team-builder Walking that extra mile, Service with a genuine smile, Foster
synergy

promotes individual Focus on the growth of individual employee, Understanding and

and common good encouragement, A sense of humour
5. Heroic Leadership: Energising Oneself for
a Greater Cause – Jesuit Story
• Managing Director at J.P.
Morgan in New York, Tokyo,
Singapore, and London for
17 years.
5. Heroic Leadership: Energising Oneself for
a Greater Cause
• Chris Lowney's book "Heroic Leadership" explores the concept of leadership by
drawing lessons from the Society of Jesus (Jesuits), a 450-year-old tradition.
Effective leaders can learn from Jesuit principles and apply them in various
personal and professional settings.
• The first principle is self-awareness, which involves understanding strengths,
weaknesses, values, and worldview. Leaders who know themselves well can
pursue their goals vigorously and inspire others to do the same. Continuous self-
reflection and learning are vital for success in a complex and rapidly changing
world.
• The second principle is ingenuity, which involves the willingness to embrace
change, adopt new ideas, and work creatively across cultures. In today's world,
adaptability and rapid response are essential leadership skills.
5. Heroic Leadership: Energising Oneself for
a Greater Cause
• The third principle is engaging others with a positive, compassionate
attitude of love. The Jesuits' success came from their ability to
recognize and develop talent, motivated by a genuine desire to help
others reach their fullest potential. Love-driven leadership involves
guiding individuals towards their own perfection and fostering a sense
of unity and common purpose.
• Overall, applying these principles can lead to effective leadership,
personal growth, and organizational success.
5. Heroic Leadership: Jesuit Way of
Energising Oneself for a Greater Cause
• The Jesuit team did distinct things to make their goal a reality (and no, it wasn’t
just composing and publishing a mission statement).
• They encouraged recruits to transform a corporate goal into a personal mission.
• They created a company culture that emphasised heroism by exemplifying it
themselves.
• Each individual was afforded the opportunity to grow by contributing
meaningfully to a cause greater than her own interests.
• Self-motivation was Loyola’s most profound practical insight into heroic
leadership
5. Francis Xavier's heroic leadership (1506-
1552)
• Spanned continents and centuries, leaving an enduring legacy of faith, compassion,
and cultural understanding.
• 1506: Born in Xavier Castle, Navarre, Spain
• Traveled to India, 1542
• Preached in Japan, 1549
• Southeast Asia missions, 1552-1553
1. Selflessness: Endured harsh climates and hardships & Sacrificed personal comforts for
the mission
2. Cultural Adaptation: Learned local languages and customs & Effective
communication in diverse regions
3. Education and Literacy: Established schools in Goa, India & Promoted education
and literacy
4. Compassion and Charity: Cared for the sick and needy & Acts of kindness built trust
5. Religious Leadership: Co-founder of the Society of Jesus (Jesuits), 1540
6. Conclusion: Challenge to be a Genuine
LEADER
• Assertive • Gentle
• Firm • Compassionate
• Demanding • Understanding
• Achieving/Performing • Flexible
• Clear and precise • Freedom-fostering
communication • Feel them valued
• Goals of the Company • Motivates (intrinsically)
• Ethical • Sense of Fulfilment
• Integrity • Self-Worth
1. Moral Leadership (John W. Gardner and James McGregor Burns)
2. Moral Reasoning and Character-Based Leadership (Trolly Problem)
3. Character-Based Leadership: Authentic Leadership
4. Character-Based Leadership: Servant Leadership
5. Heroic Leadership: Energising Oneself for a Greater Cause – Jesuit Story
6. Conclusion: Challenge to Be Genuine Leader
7. Ethical Climate (3 Caselets)

• Appendix
• Trustworthiness
• The Pygmalion Effect or Self-Fulfilling Prophecy
• Disciplining without Humiliating
• Machiavellianism: Strategic and Manipulative Behaviour
• Dealing with an Unethical Boss
• Whistleblower Policy: Promoting Ethics and Accountability in Organizations
Caselet 1: Mozilla
• Mozilla was built on the mission to promote openness, innovation and
opportunity on the Web
• Brendan Eich was a co-founder of Mozilla, an organization set up as a
nonprofit foundation, passionate about its purpose. Eich’s previous
political support for the Defense of Marriage Act and Prop 8 (banning
same sex marriage)
• Strongly employees and outsiders would react to a perceived disconnect
between Eich’s personal values and the values
of the company.
• Eich made his own decision to resign as CEO and declined
the board’s offer to take another C-level position.
Caselet 2: American Apparel
• “Passion, innovation & ethical practices for the clothing
industry. That's American Apparel.”
• American Apparel founder Dov Charney has never
apologized for using sex to sell clothes.
• Acknowledged his personal behavior is strange and he is
his own worst enemy.
• American Apparel starting asking employees to sign a
form indicating that they knew they were coming to work
in a sexually charged environment.
Caselet 3: Snapchat
• At the end of May 2014, details of sordid emails from Snapchat CEO
Evan Spiegel’s college days were released to the media. Trouble is, his
college years were only four years prior to these emails being released,
because, in 2014, he was only 24. The e-mails detailed illegal drug
use, underage drinking, and misogynistic behavior, including urinating
on one after she passed out following sex, and harassing women who
he believed were overweight. Some found elements of his emails
racist as well.
• “I’m obviously mortified and embarrassed that my idiotic
emails during my fraternity days were made public. I have no
excuse….”
 Questions to Consider
1.Are there ethical issues involved in all of these cases? Which ones and
why?
2.How important to a company’s investors and shareholders is the
personal behavior of the CEO? Do people have to like him/her for the
company to be successful?
3.Does mission matter when assessing gaps between a leader’s values
and the organization he or she is running?
4.Should boards consider risky personal behavior in hiring executives?
What should boards do if the risky personal behavior comes from the
founding CEO?
https://www.scu.edu/ethics/focus-areas/business-ethics/resources/case-on-executive-integrity/
Appendices
Trustworthiness: The Foundation of Reliable
Leadership
• Trustworthiness, a fundamental leadership quality, encompasses
honesty, dependability, and credibility. It's crucial for strong
leadership, healthy relationships, and ethical behavior.
• Trust fosters safety, mutual respect, and bonds.
• Trustworthy individuals prioritize open communication, high moral
standards, and ethical conduct. Organizations valuing integrity enjoy
employee engagement and customer loyalty.
• Tips: Keep commitments, be dependable.
Trustworthiness
• Integrity is a crucial quality that forms the basis of leadership skills and
trustworthy relationships. Integrity incorporates honesty, dependability, and
credibility and is vital in nurturing healthy personal and professional
relationships.
• Trustworthy individuals prioritise open communication, honour their
commitments, and act with honesty. A close relationship exists between
trustworthiness and ethical behaviour, as responsible leaders are more likely
to prioritise honesty and uphold moral principles.
• Individuals and organisations create an environment that fosters mutual
respect, effective collaboration, and ethical behaviour by cultivating credibility
(brand/image).
The Pygmalion Effect or Self-Fulfilling
Prophecy
• The self-fulfilling prophecy is a psychological concept where a person's expectations about
someone else can actually shape that person's behavior, leading to the fulfillment of the
initial expectation. An illustrative example of this phenomenon is known as the Pygmalion
effect, a term coined by Robert Rosenthal and Lenore Jacobson (1968).
• Their research showed that when teachers held high expectations for certain students, those
students tended to exhibit greater improvement in their IQ scores compared to others,
ultimately validating the teachers' expectations.
• This effect extends beyond the classroom and can be observed in various settings. It has
significant implications for individuals' self-concept and performance, as it demonstrates
the power of belief and expectations in shaping outcomes.
• In the workplace, for instance, managers' expectations for employee performance can
similarly influence and even enhance their actual performance. The self-fulfilling prophecy
underscores the importance of positive expectations and the impact they can have on
individuals and their achievements.
Disciplining: Correcting without Humiliating
• A young man reconnects with his former teacher, now elderly, and expresses how the
teacher's influence inspired him to become an educator himself. He recalls a pivotal
incident from his youth when he stole a classmate's watch, only to be caught by the
teacher.
• Instead of publicly shaming him, the teacher discreetly searched for the stolen item,
preserving the young man's honor while imparting a valuable lesson.
• This unique approach prevented the young man from heading down a criminal path
and ignited his passion for education. When the teacher is asked about the incident, he
remembers it vaguely but not the specific individual involved, as he had closed his
eyes during the search.
• The story beautifully illustrates the profound impact that a genuine educator's
compassionate and insightful approach can have on shaping a student's life and
inspiring them to follow in their footsteps.
Respecting and Not Humiliating
• Pick a suitable location: Find a setting where the individual will feel secure and at ease receiving comments. It
may be awkward or humiliating to reprimand or criticise someone in front of others.
• Speak in a positive manner: Rephrase your criticism in an uplifting and encouraging way. Recognise the
individual’s efforts or intentions to start, then concentrate on the areas that want development. Offer advice or
other strategies to help them correct their errors.
• Be precise and objective: Clearly state the problem or error and provide specific examples to support your
claim. Instead of criticising the person’s attitude or character, concentrate on the behaviour or action that needs
to be corrected. This helps to prevent personal attacks and keep the criticism impartial.
• Speak with empathy: Express empathy and compassion for the person’s viewpoint or difficulties. Use
expressions like “I understand it might have been challenging” or “I can see why you chose that approach.” This
fosters a more accepting environment for hearing the correction and shows them that you appreciate their
efforts.
• There is no place for insulting, scolding or humiliating the person, even if he or she is a repeat offender. Indicate
to the offender that you are really concerned of him.
Machiavellianism: Understanding the Nature
of Strategic and Manipulative Behaviour
• Machiavellianism is a personality trait marked by cynicism, self-interest,
and manipulation for personal gain. Those with this trait excel at
manipulation and strategic thinking but often prioritize self-interest over
others.
• This can result in shallow relationships, toxic workplaces, and distrust in
leadership and institutions. To address Machiavellianism, it's crucial to
raise awareness and provide education, promote ethical leadership, and
cultivate a positive organizational culture.
• These steps can mitigate the negative effects of Machiavellianism and
encourage ethical behavior and collaboration.
• Niccolò Machiavelli (1469 –1527) was an Italian diplomat, author, philosopher
Dealing with a Machiavellian colleague
• Stay Objective: Maintain a calm and objective outlook when dealing with the
colleague. Avoid getting emotionally entangled in their manipulative tactics.
• Document Incidents: Keep a record of any incidents of manipulation or
unethical behavior. Having documentation can be valuable if you need to
address the issue with higher authorities.
• Set Boundaries: Establish clear boundaries with the colleague and assertively
communicate your limits. Avoid being drawn into their manipulative games.
• Limit Personal Information Sharing: Be cautious about sharing personal
information with a Machiavellian colleague, as they may use it against you
later.
Dealing with a Machiavellian colleague
• Seek Support: Reach out to trusted colleagues or friends within the
office who can provide emotional support and advice on dealing with
the situation.
• Focus on Your Work: Stay focused on your tasks and professional
goals, and avoid getting distracted by the colleague's behavior.
• Don't Engage in Manipulation: Resist the temptation to use
manipulative tactics to counter their actions. Maintain your integrity
and ethical standards.
• Seek Mediation: If the situation escalates and becomes unbearable,
consider seeking mediation or involving HR to address the issue.
Dealing with a Machiavellian colleague
• Address Concerns with Management: If the colleague's behavior
negatively impacts the team or work environment, consider discussing
your concerns with higher management.
• Look for External Opportunities: If the situation becomes unbearable,
start exploring external job opportunities to remove yourself from the
toxic environment.
• Remember, dealing with a Machiavellian colleague requires tact and self-
preservation. Stay true to your values, remain professional, and focus on
maintaining a healthy work environment for yourself and your team.
Upward Ethical Leadership
• Refers to employees standing up for ethical principles when their
superiors engage in unethical behavior. It emphasizes personal integrity
and provides strategies for addressing ethical dilemmas in such situations.
• These strategies involve strengthening moral beliefs, seeking advice from
trusted peers and mentors, using ethical decision-making frameworks,
and initiating constructive conversations with the supervisor.
• Documenting unethical conduct and seeking external assistance if
internal actions prove ineffective can also be considered.
• The goal is to foster ethical leadership and empower employees to
maintain ethical cultures within organizations.
Dealing with an Unethical Boss
• Stay Calm and Objective: When dealing with unethical behavior, try to stay
calm and objective. Avoid reacting emotionally, as it may escalate the
situation.
• Document Incidents: Keep a record of any unethical incidents or actions of
your boss. Document dates, times, and details of what occurred. This
documentation can be crucial if you need to report the behavior later.
• Seek Support: Talk to trusted colleagues, friends, or family members about
the situation. Having a support system can help you cope with the stress and
provide valuable advice.
• Know Company Policies: Familiarize yourself with your company's policies
and procedures regarding ethical concerns and reporting misconduct.
Dealing with an Unethical Boss
• Explore Internal Reporting Channels: If your company has an anonymous whistleblower
hotline or an internal reporting system, consider using it to report the unethical behavior.
Make sure to follow the appropriate procedures and keep your identity confidential if
needed.
• Consider Talking to the Boss: If you feel comfortable and safe doing so, consider
discussing your concerns directly with your boss. Choose a private and respectful setting
to express your feelings and observations.
• Gather Witnesses: If possible, find colleagues who may have witnessed the unethical
behavior. Their testimonies can lend credibility to your claims if you need to take the
matter further.
• Consult HR or Management: If your boss's behavior persists and affects your work
environment, consider talking to your Human Resources department or higher
management. Present your documented evidence and seek guidance on how to proceed.
Dealing with an Unethical Boss
• Maintain Professionalism: Despite the challenges, maintain your
professionalism and continue performing your job to the best of your
abilities. Avoid engaging in any unethical practices yourself.
• Protect Yourself: If the situation becomes unbearable and your
concerns are not addressed, start exploring external job opportunities
to protect your career and well-being.
• Remember that dealing with an unethical boss requires careful judgment and
consideration of your personal safety and job security. If you feel that
reporting internally may jeopardize your position, seek legal advice to
understand your rights and options. Always prioritize your well-being and
integrity throughout the process.
Whistleblower Policy: Promoting Ethics and
Accountability in Organizations
• Whistleblowing plays a crucial role in uncovering and confronting
wrongdoing in organizations. A well-designed whistleblower policy is
essential in nurturing an ethical, transparent, and accountable culture.
• Implementing such a policy can lead to the exposure and rectification
of internal malfeasance, resulting in improved internal controls and
accountability.
 Key Elements of a Successful Whistleblower
Policy
1. Confidentiality and Anonymity: Whistleblower policies must protect the identity of the whistleblower and
offer anonymous reporting options. This instils confidence in the process and encourages people to come
forward without fear of retaliation.

2. Protection Against Retaliation: Policies should explicitly delineate measures of protection against
retaliation for those who report misconduct. This includes protecting whistleblowers from retaliation,
harassment, and discrimination.

3. Fair Reporting and Investigating Procedures: The policy should establish explicit reporting procedures,
including designated reporting channels, such as a hotline or an impartial third party. It should also
delineate the procedures for managing and investigating reported incidents to ensure fairness and
objectivity.

4. Communication and Awareness: Organisations should effectively communicate the whistleblower policy
to all employees, ensuring that they are aware of the reporting mechanisms, protections, and significance
of exposing unethical conduct. Regular training sessions for the management and employees can
reinforce the purpose and procedures of the policy.
Whistle-blower Policy:
The Indian Predicament
• The Whistle Blowers Protection Act of 2014 (Whistle Blower Protection Act) of
India provides a legal mechanism for denouncing illegal, unethical, or illicit
practices by members of the organisation. However, the Act only applies to public
servants and public sector organisations.
• India has inadequate laws regarding whistleblowing and the protection of
whistleblowers. However, the Companies Act, 2013, contains provisions for
whistleblowing, corporate governance, and the elimination of fraud through the
establishment of an adequate vigilance mechanism. Sections 206 to 229 of the
Companies Act, 2013, govern the inspection, inquiry, and investigation of
corporations.
The Reactance Theory: Nurturing Autonomy
and Personal Growth
• The application of Reactance theory to industry formation and employee
autonomy is quite insightful. Reactance theory highlights the natural
tendency of individuals to resist when they perceive their freedom or
autonomy is being constrained. In the context of industry and workplace
dynamics, this theory has several implications:
• Employee Autonomy
• Resisting Conformity
• Fostering Independence
• Mentoring and Open Dialogue
• Flexibility
3. Ethics and Values in Organizational
Leadership
• There is often a significant gap between a company’s stated values and the way
the company operates. Knowing the values of top leadership can sometimes tell
you more about how an organization operates than will the organization’s stated
values.
• the top leadership’s collective values play a significant role in determining the
dominant values throughout the organization, just as an individual leader’s values
play a significant role in determining team climate.
• Related to the notion of culture and climate is employee “fit.” Research has shown
that employees with values similar to the organization or team are more satisfied
and likely to stay; those with dissimilar values are more likely to leave.
3. Ethics and Values in Organizational
Leadership
• values are often a key factor in both intrapersonal and interpersonal
conflict. Many of the most difficult decisions leaders make are choices
between opposing values. A leader who valued both financial reward
and helping others, for example, would probably struggle mightily
when having to make a decision about cutting jobs to improve
profitability
• Likewise, some leaders would have difficulties making decisions if
friendships get in the way of making an impact, or when taking risks
to gain visibility runs counter to maintaining comfortable levels of
stability in a team or organization.
3. Ethics and Values in Organizational
Leadership
• In sum, it’s vital for a leader to set a personal example of values-based
leadership, and it is also important for leaders—especially senior ones
—to make sure clear values guide everyone’s behavior in the
organization.
• That’s likely to happen only if the leader sets an example of desired
behavior. You might think of this as a necessary but not sufficient
condition for principled behavior throughout the organization. If there
is indifference or hypocrisy toward values at the highest levels, it is
fairly unlikely that principled behavior will be considered important
by others throughout the organization.
3. Ethics and Values in Organizational
Leadership
• Organizations oriented to power also have strong smells.
• It affects performance, productivity, and innovation. The worst aspect of this
environment is that it stunts the growth of personality and character of everyone
who works there.

• Who knew the swashbuckling economy of the ’90s had produced so many
buccaneers? You could laugh about the CEOs in handcuffs and the stock analysts
who turned out to be fishier than storefront palm readers, but after a while the
laughs became hard. Martha Stewart was dented and scuffed [and subsequently
convicted]. Tyco was looted by its own executives. Enron and WorldCom turned out
to be the twin towers of false promises. They fell. Their stockholders and employees
went down with them. So did a large measure of faith in big corporations.
4. Leading by Example: The Good, the Bad,
and the Ugly (“Tone at the Top”)
• One of the most quoted principles of good leadership is
“leadership by example.” But what does it mean to exemplify
ethical leadership and be an ethical role model?
• In one study, people from a range of organizations were
interviewed about a person they knew who had been an
ethical role model at work.
4. Leading by Example: 4 General Attitudes
and Behaviours of Leaders
 Interpersonal behaviors: They showed care, concern, and compassion for others. They were
hardworking and helpful. They valued their relationships with others, working actively to maintain and
sustain them. They tended to focus on the positive rather than the negative, and accepted others’ failures.

 Basic fairness: A specific quality of their interpersonal behaviors was manifested in the fairness shown
others. They were not only open to input from others but actively sought it. They tended to offer
explanations of decisions. They treated others respectfully, never condescendingly, even amid
disagreements.

 Ethical actions and self-expectations: They held themselves to high ethical standards and behaved
consistently in both their public and private lives. They accepted responsibility for and were open about
their own ethical failings. They were perceived as honest, trustworthy, humble, and having high
integrity.

 Articulating ethical standards: They articulated a consistent ethical vision and were uncompromising
toward it and the high ethical standards it implied. They held others ethically accountable and put ethical
standards above personal and short-term company interests.
Manager as bad ethical model?
• “Do as I say, not as I do.”
• Upward ethical leadership has been used to
refer to “leadership behavior enacted by
individuals who take action to maintain ethical
standards in the face of questionable moral
behaviors by higher-ups.”
5. Ethical Climate
• One variable that moderates an employee’s likelihood of
raising such concerns is the general quality of ethical climate
in the organization.
• Ethical climates refer to those in which ethical standards and
norms have been consistently, clearly, and pervasively
communicated throughout the organization and embraced
and enforced by organizational leaders in both word and
example
5. Ethical climate: Creating and Sustaining
• Formal ethics policies and procedures: It’s sometimes said that “you can’t legislate
morality,” and the same may be said about legislating an ethical climate. Nonetheless,
certain formal policies and procedures are probably necessary if not sufficient conditions
for creating an ethical climate.
• Core ideology: A core ideology is basically an organization’s heart and soul. It represents
the organization’s purpose, guiding principles, basic identity, and most important values.
Starbucks is a good example. Starbucks’s guiding principles include (1) respect and
dignity for partners (employees); (2) embracing diversity; (3) applying the highest
standards of excellence to the business; (4) developing “enthusiastically satisfied
customers”; (5) contributing positively to local communities and to the environment more
generally; and (6) maintaining profitability.
• Integrity: The core ideology cannot be a mere set of boardroom plaques or other
exhortations to behave well. The core ideology must be part of the fabric of every level
and unit in the organization.
5. Ethical climate: Creating and Sustaining
• Structural reinforcement: An organization’s structure and systems can
be designed to encourage higher ethical performance and discourage
unethical performance.
Performance evaluation systems that provide opportunities for
anonymous feedback
• Process focus: There also needs to be explicit concern with process,
not just the achievement of tangible individual, team, and
organizational goals. How those goals are achieved needs to be a focus
of attention and emphasis too.
 5. Ethical Climate: not simply the sum of the
collective moralities of its members
• Covey has developed and popularized an approach called principle-centered leadership, which postulates
a fundamental interdependence between the personal, the interpersonal, the managerial, and the
organizational levels of leadership. The unique role of each level may be thought of like this:
• Personal: The first imperative is to be a trustworthy person, and that depends on both one’s character and
competence. Only if one is trustworthy can one have trusting relationships with others.

• Interpersonal: Relationships that lack trust are characterized by self-protective efforts to control and verify
each other’s behavior.

• Managerial: Only in the context of trusting relationships will a manager risk empowering others to make
full use of their talents and energies. But even with an empowering style, leading a high-performing group
depends on skills such as team building, delegation, communication, negotiation, and self-management.

• Organizational: An organization will be most creative and productive when its structure, systems (training,
communication, reward, and so on), strategy, and vision are aligned and mutually supportive. Put
differently, certain organizational alignments are more likely than others to nurture and reinforce ethical
behavior.
5. Leader’s unique ethical responsibilities and
challenges
• Leaders more than followers (1) possess unique degrees of both
legitimate and coercive power; (2) enjoy greater privileges; (3) have
access to more information; (4) have greater authority and
responsibility; (5) interact with a broader range of stakeholders who
expect equitable treatment; and (6) must balance sometimes competing
loyalties when making decisions.
5. Creating and Sustaining an Ethical Climate
Why?
• Why should a company go to the trouble of creating and sustaining an ethical climate?
• One answer—perhaps a sufficient one—is because it’s the right thing to do. (Intrinsic sense of
satisfaction)
• create and sustain an ethical environment in an organization is challenging; it takes conviction,
diligence, and commitment
• focus and effort can pay dividends beyond an intrinsic sense of satisfaction.

• An ethical climate produces greater trust within an organization, and trust is a key element
underlying collaboration.
• companies demonstrating commitment to the environment, ethics, and social responsibility are
preferred
• ethical companies often outperform their competitors.
Creating and Sustaining an Ethical Climate
• Harvard professors John Kotter and James Heskett studied
companies that aligned espoused values with organizational
practices. Such companies increased revenues by an average
of 682 percent versus 166 percent for companies that didn’t.
• Paying attention to ethics and values can be good business
Ethical Climate: Leadership and Ethics for
Organizational Success
• A positive ethical climate in an organization is essential for fostering
trust, integrity, and ethical behavior among its members.
• Ethical leaders play a crucial role in shaping this climate by setting
clear ethical standards, demonstrating ethical behavior, and promoting
openness and accountability.
• A positive ethical climate has numerous advantages, including
enhanced reputation, increased productivity, and improved stakeholder
relationships.
• On the other hand, a negative ethical climate can lead to a lack of trust,
decreased morale, and increased risk of unethical behavior and legal
liabilities. Prioritizing ethical behavior and fostering a positive ethical
climate can contribute to the overall success of an organization.
Conclusion: The Challenge to be a LEADER
• Assertive • Gentle
• Firm • Compassionate
• Demanding • Understanding
• Achieving/Performing • Flexible
• Clear and precise • Freedom-fostering
communication • Feel them valued
• Goals of the Company • Motivates (intrinsically)
• Ethical • Sense of Fulfilment
• Integrity • Self-Worth
1. Moral Leadership (John W. Gardner (On Leadership, 1990) and James McGregor
Burns (Leadership, 1978)
2. Moral Reasoning and Character-Based Leadership (Trolly Problem)
a. Character-Based Approaches to Leadership: Authentic Leadership
b. Character-Based Approaches to Leadership: Servant Leadership
3. Ethics and Values in Organizational Leadership
4. Leading by Example
5. Ethical Climate (3 Caselets)

• Appendix
• Trustworthiness
• Heroic Leadership: Jesuit Way of Energising Oneself for a Greater Cause
• The Pygmalion Effect or Self-Fulfilling Prophecy
• Disciplining without Humiliating
• Machiavellianism: Strategic and Manipulative Behaviour
• Dealing with an Unethical Boss
• Whistleblower Policy: Promoting Ethics and Accountability in Organizations