LEADERSHIP ETHICS: THE INTEGRITY
CAPACITY CHALLENGE
Dr. Joseph A. Petrick
Executive Director
Institute for Business Integrity
Wright State University
Leadership Ethics Lecture Series
Ohio Northern University
March 7, 2007
AGENDA
A.
B.
C.
D.
Leadership Ethics and Rebuilding Stakeholder Trust
Integrity Capacity Model for Leadership
Development
1. Leadership Process Integrity Capacity
2. Leadership Judgment Integrity Capacity
3. Leadership Developmental Integrity Capacity
4. Leadership System Integrity Capacity
Microeconomic and Macroeconomic Improvements
1. Improved Microeconomic Moral
Accountability
2. Improved Macroeconomic Moral
Accountability
New Agenda for Responsible Leadership
Leadership Ethics and Rebuilding
Stakeholder Trust
1. Ethical Leadership Failures
2. Literature on Leadership is Vast.
3. Need For a Current Working
Definition of Leadership
4. Need for a Current Working Model
of Moral Leadership
Working Definition of Leadership
• Leadership is an influence process, both
visible and invisible, in a society
inherited, constructed, and perceived as
an interaction of persons in human (and
inhuman) conditions of partnership
and/or inequality – an interaction
measured by ethical values and by the
degree of realization of intended,
comprehensive, emergent, balanced and
sustainable change.
Integrity Capacity Model
of Moral Leadership
The individual and collective capability
for repeated process alignment of
moral awareness, deliberation,
character and conduct that
demonstrates balanced judgment,
enhances sustained moral
development, and promotes
supportive systems for moral decision
making.
Integrity Capacity Model
of Moral Leadership
1. Individual and Collective
Integrity Capacity as both
Intrinsically and Instrumentally
Valuable
2. Integrity Capacity as an
Intangible Strategic Asset that
Enhances Power and
Reputational Capital
Instrumental Value of
Leadership Integrity Capacity
Leadership Integrity
Capacity
Reputational
Capital
Sustainable Competitive Advantage,
Multiple Stakeholder Trust & WorldClass Performance
Dimensions of Leadership
Integrity Capacity
1. Leadership Process Integrity Capacity:
Moral Coherence
2. Leadership Judgment Integrity Capacity:
Moral Soundness
3. Leadership Developmental Integrity
Capacity: Moral Maturity
4. Leadership System Integrity Capacity:
Moral Wholeness
Leadership Process Integrity Capacity:
Moral Coherence
The alignment of individual and/or
collective leadership moral awareness,
deliberation, character, and conduct on a
sustained basis, so that moral coherence
results.
Leadership Process Integrity Capacity:
Moral Coherence
MORAL AWARENESS
Perception
Sensitivity
MORAL DELIBERATION
Analysis
Resolution
MORAL CHARACTER
Cognitive Readiness to Act
Volitional Readiness to Act
MORAL CONDUCT
Responsible
Sustainable
Virtues That Build Leadership &
Collective Character
1.
2.
3.
4.
5.
Intellectual Virtues
Moral Virtues
Social Virtues
Emotional Virtues
Political Virtues
Leadership Judgment
Integrity Capacity: Moral Soundness
The balanced and inclusive use of key
ethics theories and their subordinated
cognate theoretical resources in the analysis
and resolution of individual and/or collective
ethical issues that demonstrate the moral
soundness of leadership judgment.
Leadership Judgment Integrity
Capacity (R2C2): Moral Soundness
Flexibility
Build
Virtuous
Character
Enhance
Supportive
Contexts
Internal
External
Follow
Right
Rules
Achieve
Good
Results
Control
Positive & Negative Zones of Leadership Moral Judgment
Integrity (R2C2)
Negative Zone
Abdicates
Authority
Positive Zone
Shows Consideration
Character
Wastes Energy
Context
Envisions Changes
Slows
Production
Acquires
Resources
Facilitates
Interaction
Disrupts
Continuity
Negative Zone
Amoral
Professionalism
Collects
Information
Rules
Initiates Action
Neglects
Possibilities
Destroys
Cohesion
Maintains Structure
Stifles
Progress
Provides Structure
Offends
Individuals
Results
Leadership Judgment Integrity Capacity
Based on Respecting Four Human Nature Drives
Negative Zone
Context
Positive Zone
Character
DRIVE TO
BOND
DRIVE TO
LEARN
Negative Zone
Amoral
Professionalism
DRIVE TO
DEFEND
Rules
DRIVE TO
ACQUIRE
Results
Ranges of Moral Judgment
Evaluation using R2C2 ™
Quantitative
Ranges
0–1
2
3
4
5
6
7
8
9 – 10
Qualitative Anchors
Extremely Unacceptable
Under-emphasis
Unacceptable Under-emphasis
Minimally Acceptable Emphasis
Below Average Emphasis
Average Emphasis
Above Average Emphasis
Optimal Emphasis
Unacceptable Over-emphasis
Extremely Unacceptable
Over-emphasis
Judgment Integrity Capacity Graph &
Global Leadership Ethics Communication
DILBERT CEO LACK OF LEADERSHIP
JUDGMENT INTEGRITY CAPACITY
LEADERSHIP EXTREME CONCERN FOR PROFITS
Flexibility
Context
(ADAPTABILITY)
Character
(INVOLVEMENT)
Internal
External
Results
(EFFECTIVENESS)
Rule
s
(CONTINUITY)
Control
Leadership Developmental
Integrity Capacity: Moral Maturity
The organizational and extra-organizational
cultural cognitive improvement of individual
and/or collective leadership moral reasoning
capabilities from a stage of self-interested
connivance, through a stage of external
conformity, and onto a stage of internalized
commitment to moral principles that
demonstrates moral maturity.
Leadership Moral Development
Stages & Their Work Cultures
Principled Integrity
HOUSE OF INTEGRITY
Democratic Participation
(Commitment)
Allegiance to Authority
HOUSE OF COMPLIANCE
Popular Conformity
(Conformity)
Machiavellianism
HOUSE OF MANIPULATION
Social Darwinism
(Connivance)
Leadership Moral Development
Stages & Leadership Theories
Principled Integrity
Democratic Participation
Allegiance to Authority
Popular Conformity
Principled Transforming
Leadership Theories
Majority Participation and
Servant Leadership Theories
Institutional Contingency
Leadership Theories
Leader-Membership
(Conformity)Exchange
Theories
Machiavellianism
Path-Goal/Transactional
Leadership Theories
Social Darwinism
Autocratic Coercive Power
Leadership Theories
Leadership System Integrity Capacity:
Moral Wholeness
The development and alignment of the moral
infrastructure within the organization and the
shaping of the external moral environment of
the leader’s organization to provide a
supportive context for moral wholeness in
decision making.
Leadership and Internal System
Integrity Capacity
Organizational Moral Environment
• Compliance-Based Systems
• Prevent Criminal Misconduct
• U.S. Federal Sentencing Guidelines
(USFSG)
• Sarbanes-Oxley Act (SOX)
• Integrity-Based Systems
• Enable Responsible Conduct
Compliance-Based Organization
Internal Systems
1. Establish compliance standards and
procedures
2. Assign high level individuals to oversee
program
3. Exercise due care in delegating
discretionary authority
4. Communicate and train
Compliance-Based Organization
Internal Systems
5. Monitor, audit, and provide safe
reporting system
6. Enforce appropriate discipline with
consistency
7. Respond to offences and prevent
further misconduct
8. Comply with USFSG & SOX
requirements
Integrity-Based Organization
Internal Systems
1. Moral Leadership at the Top
2. Ethics Needs Assessment &
Compliance Standards in Place
3. Ethics in Strategy and Structure
4. Integrity Steering Committee
5. Statement of Values/Written
Code of Conduct
6. Ethics Policy and Procedure Manuals
Integrity-Based Organization
Internal Systems
7.
Ethics in Selection, Socialization, and
Performance Subsystems
8. Ethics in Appraisal,
Rewards/Recognition/Incentive,
and Development Subsystems
9. Ethics in Communication Processes
and Work Attitudes
10. Ethics Training and Education Programs
11. Ethics in Decision-Making/Meeting
Processes
Integrity-Based Organization
Internal Systems
12. Organizational Integrity Advisor
Responsibilities
13. Ethics Reporting, Whistleblower
Protection and Conflict Resolution
Processes
14. Enforcement Processes of Ethical
Standards
15. Ethics Monitoring, Auditing &
Improving Subsystems
16. Ethics System and Quality Work
Process Control and
Improvement
Ethical Leadership Assessment
Instrument
1. Listens to what employees have to say
2. Disciplines employees who violate
ethical standards
3. Conducts his/her personal life in an
ethical manner
4. Has the best interests of employees in
mind
5. Makes fair and balanced decisions
Ethical Leadership Assessment
Instrument
6. Can be trusted
7. Discusses business ethics or values
with employees
8. Sets an example of how to do things
the right way in terms of ethics
9. Defines success not just by results but
also by the way that they are obtained
10. When making decisions, asks “what is
the right thing to do?”
Source: M.E. Brown et al. / Organizational Behavior and Human Decision Processes
(2005) 97:117–134
External System Integrity Capacity
1. Domestic External Moral Environment
• Corruption Elimination and/or Control
• Industry & Professional Standards
• Proactive Positive Stakeholder Relations &
Triple Bottom Line Accountability
2. Global External Moral Environment
• Corruption Elimination and/or Control
• Industry & Professional Standards
• Proactive Positive Stakeholder Relations &
Triple Bottom Line Accountability
Improved Microeconomic Moral
Accountability
A. Individual Leadership Accountability
Improvement
1. Demonstrated Process Integrity
Capacity: Moral Coherence
2. Demonstrated Judgment Integrity
Capacity: Moral Soundness
3. Demonstrated Developmental Integrity
Capacity: Moral Maturity
4. Demonstrated System Integrity
Capacity: Moral Wholeness
Improved Microeconomic Moral
Accountability
A. Collective Leadership Accountability
Improvement
1. Demonstrated Process Integrity
Capacity: Moral Coherence
2. Demonstrated Judgment Integrity
Capacity: Moral Soundness
3. Demonstrated Developmental Integrity
Capacity: Moral Maturity
4. Demonstrated System Integrity
Capacity: Moral Wholeness
Improved Macroeconomic Moral
Accountability
A. Professional Association/Industry
Accountability Improvement
1. Strengthen leadership professional education
2. Strengthen leadership for institutional reform
3. Strengthen professional/industry/education
accountability links
B. Political Economy Accountability Improvement
1. Balancing types of capitalism/economic
democracy
2. International leadership harmonization through
global business, government & NGO linkages
3. Domestic & global governance board reforms
Balancing Types of Capitalism
Negative Zone
Entrepreneur
Capitalism
Positive Zone
Communit
y
Capitalism
DRIVE TO
BOND
DRIVE TO
LEARN
Negative Zone
Amoral
Professionalism
DRIVE TO
DEFEND
Regulatory
Capitalism
DRIVE TO
ACQUIRE
Investor
Capitalism
New Agenda for Responsible
Leadership in Organizations
• National commission with task forces on
improving microeconomic levels of
leadership integrity capacity
accountability
• International commission with task
forces on improving macroeconomic
levels of leadership moral accountability
• Integrity capacity building skills in
mainstream leadership professional
education
LEADERSHIP ETHICS: THE INTEGRITY
CAPACITY CHALLENGE
Dr. Joseph A. Petrick
Executive Director
Institute for Business Integrity
Wright State University
Leadership Ethics Lecture Series
Ohio Northern University
March 7, 2007