Challenges of Leadership in a Low Trust World
Today’s Focus
Talk about business ethics & promote shared
understanding of the term
Provide opportunity reflect on your own ethical
stance – personal, organisational & societal
Look at some of the challenges in
understanding Asian perspectives
Talk about ethical leadership
Suggest ways of safeguarding your
organisation’ ethics & responding to times
Business Ethics vs Individual Morality
Ethics is examining moral
standards of a person, a
company or a society to
decide whether these
standards are reasonable
and to apply them to
contexts and issues.
Morality refers to how
individuals make
judgments about right
& wrong.
Who
decides what’s ethical?
Society Decides
What’s Ethical
 (CSR) Corporate Social
Responsibility Sustainability
 Institutional integrity - do systems
support stated values?
 Do people understand values
/codes and when to apply them?
 Is the common good protected?
Where are you starting from?
An organization can only be as ethical as it’s employees
True or False
Leaders can have different personal and work standards
True or False
Every employee possesses ethical leadership qualities
True or False
Organizational culture is the lengthened shadow of the people
at the top
True or False
Ethical people will behave unethically
True or False
Success without ethics... is failure
True or False
Bad Apple/Bad Barrel Cultural Checklist
Systems Level
Personal Level
Lack of ethical leadership – do as I
say not as I do; expediency rules
Pressure to conform
Unprofessional managers
Compliance Priority
Diffusion of responsibility
Blame cultures emerges
Group Commitment
Ignorance of Ethical Implications
Poor Interpersonal Skills
Self Interest
Lack of Consequences
Sense of Entitlement
Psychological Disengagement
Ethical Behaviour at Work
Worker’s
Rights (Unjust
Dismissal)
Privacy
Protection
Discrimination
Sexual
Harassment &
Family Issues
International
Business
Ethics
Ethical
Behaviour
Environmental
Protection
Ethics in
Finance
Trade secrets
and Conflict of
Interest
Ethical Conduct
in the
Information Age
Occupational
Health &
Safety
Product
Safety
Ethical
Conduct in
Marketing &
Advertising
15
Corporate
Governance &
CSR
Whistle-Blowing
Business Ethics @ Work
How good people find themselves doing unethical things
‘What is right in the corporation is not what is right in a
man’s home or in his church.
What is right in the corporation is what the guy above you
wants from you.
That’s what morality is in the corporation.’
- Robert Jackall, Moral Mazes
Models of Ethics Management
Unethical/Immoral
Management
Ethical/Moral
Management
Amoral
Management
Circumvent the law; absence of ethical
Principles and accountabilities
Conforms to high standards
of ethical behavior
Intentional: does not consider
ethical factors
Unintentional: casual or careless
about ethical factors
Conflict of Interest Stories from the Field
• Conflicts of interest are inevitable. The people most suited to leadership
have wide personal networks, so encounter situations where loyalty
comes into conflict with truth eg. loyalty mates/family competes with duty
of integrity to their position.
• The goal is not to avoid conflicts of interest, but to manage these values
clashes so they do no harm.
• The last person to spot a conflict of interest is the person engaged in it.
Conflicts that are perfectly obvious to colleagues, friends, and
acquaintances remain shrouded from the view of the actor himself.
• Conflicts of interest are actual and perceived. The perception of selfdealing can be just as damaging to a reputation as the real thing.
Know your time
In interconnected world anything you do in private can find
its way into the public domain
Legislators around the world insist business leaders accept
accountabilities for the types of organisational cultures and
ethical risks that emerge under their stewardship
People listen with their eyes and take their lead from what
gets rewarded
Newly enacted US and UK legislation makes business leaders
(not employees) accountable for corrupt corporate
behaviour
2011 research amongst 144 global organizations found the
top 3 challenges:
•Getting employees to speak up about ongoing concerns
•Getting leaders to demonstrate ethical leadership
•Establishing an ethical culture
Learning from current reputational crisis –
BP, Rio Tinto, Citibank, Siemens, HSB, Federal Reserve Bank;
AWB, Goldman Sachs…
• It can no longer be assumed that people know the right thing to
do; a company’s reputation is too valuable to be left to chance
• Strengthening your ethics infrastructure is an essential part of
modern business success and is the collective responsibility of all
leaders
• Your brand value is as strong as the weakest link within your
operations
• What’s legal often falls short of what’s ethical and leaves
reputations vulnerable
Decisions you make have a direct impact in two major areas:
Social Capital
Reputation/Trust
Financial Capital
Rates/Costs
What would you do?
You are a senior manager with a reputation for fairness and being open minded.
In amongst the dozens of emails you receive daily, you receive some that are
humorous, which of course you ignore most of the time. However, you have just
received an email that has pornographic images in it, albeit intended to be funny.
You find this one offensive; you also know that the sender has a reputation for
crude language and using inappropriate nicknames for his female colleagues.
What do you do?
$
Image
 Delete the email. You are too busy and you expect these things in an
industrial environment.
-2
-2
 Ring the individual and tell him you don’t appreciate receiving material
of this nature and to stop sending this stuff.
-1
+1
 Go to the individual’s manager, a peer of yours, and tell him that he
should speak to him.
+2 +2
 Forward the email to the Director HR and make a formal complaint.
+1 +2
What would you do?
You are senior manager. The strength of your overseas expansion has been a
network of agents who have facilitated the negotiation of contracts with overseas
governments. You personally have found them to be strange beings with a
different view of the world. As part of a routine review of accounting procedures,
you come across a request from an agent for a large payment for what is termed
‘contract smoothing’. When you investigate further, the agent has requested that
the amount be paid into an account in Labuan, on the island of Borneo, well
known for its lax taxation laws. What do you do?
 Let it pass. It’s not your business to question the business practices in
overseas countries.
 Inform the CEO and insist they launch an investigation into the
dealings of this agent.
 Inform the agent you can only pay legitimate sums into an account in
the country in which he operates.
 Ring the ethics hotline and seek advice.
$
Image
-2
-2
+2 +2
+1 +2
-1
-1
What would you do?
Tony is a senior project manager on one of your toughest projects. It’s a new process
that the company hasn’t had much experience of in this country. Tony was recruited
from overseas to run the project. As it’s a government project a lot of reputations are
riding on it. There are other challenges, not least the industrial environment. Tony has
a reputation for ‘doing things his way’ but also for getting results.
One of your senior engineers, Ron, has spent 6 months seconded to the project and
has just returned to your division. He is not too flattering about some of Tony’s
methods and reports stories of widespread rorting of the procurement processes by
supervisors and managers on Tony’s project but concedes that it is a closely knit unit.
What do you do?
$
Image
 Tell Ron to stop gossiping
-2
-2
 Thank Ron for his concerns but remind him that Tony has a tough task
and may need to do things differently. You’re sure nothing illegal is
going on.
-1
-2
 Seek a meeting with the CEO to discuss Ron’s concerns and the
potential effect on the company’s reputation.
+1 +2
 Seek a meeting with Tony, tell him about what you’ve learned and ask
him to look into it.
0
+2
What would you do?
In one of your important Asian markets, you are letting a contract for disposal of
industrial waste for recycling and have sought quotes from local companies .
One of the bids has come from a new company whose principal’s name is the same
as that of the head of the Mines & Minerals department of the government. Your
procurement manager now advises that the person is, in fact, the cousin of the
head of the Mines & Minerals Department and that he runs a legitimate recycling
business. The procurement manager adds that ‘it wouldn’t do any harm to our
government relations to have him as a subcontractor.’
The bid is in line with the others on price and quality. What do you do?
$
 Tell the procurement manager to accept the bid and evaluate
according to the same criteria as the others.
Image
+1 -2
0
+2
 Ring your Head of Compliance and ask his advice.
-1
0
 Split the contract between two companies.
+1 -2
 Tell the manager to reject the bid and remove him from the list.
How do you currently rate in managing the ethical dimension?
•
Where is your company’s line in the sand?
•
How do your leaders model ethical behaviour and set the ethical
tone?
•
Why might good people in your company do unethical things?
•
What do existing ethical challenges look like?
•
How do you protect the values associated with your company?
•
How are your values promoted, measured and rewarded?
Business Ethics
Business Ethics involves learning what is right or wrong as defined by the
organisation and then doing the right thing even when the ‘right thing’ costs.
How to resolve
the issue / case?
How to justify the
decision taken?
How to identify
what is important?
Ways of defining our social reality
The ‘Western’ way is individualistic & results-oriented. In this worldview we’re
a big cause of what happens in our lives and organizations. We like to mould
reality as if it were dough and prefer an internal locus of control.
The ‘Eastern’ way accepts reality the way it is. This is ‘Tao’: observe nature and
see that change is inherent in everything. Individuals are part of reality and ‘are
changed’ with it; part of the dough that is being kneaded. The collective is
more important than the individual and there is a preference for a more
external locus of control; work smart.
Calls for practice the difference between perceiving and judging; to practice to
see what is and an observation of a fact - as opposed to what was our
interpretation we’ve attached to someone else’s behaviour.
Heidenheimer
Class A Black Corruption
• bribe, fraud, embezzlement, extortion, tax evasion, smuggling
‘economic crimes’
Class B Grey Corruption
• abuse of institutional power to further self interests; extravagance or
waste public purse
Class C White Corruption
• ‘common practice’ of social life including nepotism, favouritism,
preferential treatment. Creating & maintaining networks of personal
relations to seek and give favourable treatments
Global Standards and Accountabilities
 The 1991 U. S. Federal Sentencing Guidelines for Corporations
 UK Bribery Act
 Companies signed to the UN Global Compact (over 3,700) Commits
participating businesses of the Global Compact to “avoid bribery,
extortion and other forms of corruption” and to “develop policies and
concrete programs to address corruption”.
 Australian Criminal Code 2004 states that a corporation can be held
criminally responsible if it is established that "a corporate culture
existed within the body corporate that directed, encouraged,
tolerated or led to non-compliance with the relevant provision" or by
showing that "the body corporate failed to create and maintain a
corporate culture that required compliance with the relevant
provision"
How do Ethics and Leadership
Become One?
What is right & worthwhile
• Goals & objectives; purpose & direction
How should we reach our goals
• The ends-means relationship
Leader-Follower Relationships
• Trust, respect, dignity, reciprocity
How does the leader get others to behave ethically?
• The leader’s influence over their people’s choices & actions of
others = the ethical climate
Ethics at Work – The Reality
1
The ethical side of workplace decisions do
not take care of themselves
2
Ethical issues need to be anticipated,
confronted, discussed and managed
3
Our values need to guide our ethical
decisions
4
Accept you have a choice & personal
accountability
5
Make informed choices
6
Be prepared to stand up and be counted
Evaluating the Right Thing to Do
Individual
Perception
Time
Dimension
Context
Dimension
Stakeholder
Dimension
Ethical Decision Making Model
Step 1. Define the problem
Step 2. Identify and consider
stakeholders
Step 3. Identify relevant legislation,
underlying values and policies
Step 4. Specify and evaluate alternatives
Step 5. Get another opinion from an
informed person
Step 6. Make a decision and act