Texas Certified Public
Manager Conference
February 3, 2012
“On The Need For Ethical
Leadership in Public Service”
©2012
Howard T. Prince II, Ph. D.
LBJ School of Public Affairs
University of Texas at Austin
1
Is everyone here a graduate of or a
participant in the CPM program?
Who is a graduate of or participant in
the CPL program?
2
Are you a leader or a manager?
Both?
3
Leadership may be the single
greatest influencer of culture
and ethical behavior.
The Ethical Enterprise, 2006
American Management Association
Human Resource Institute
4
The nature of leadership should
be of interest to all thinking people.
John Gardner
On Leadership
2
Ethical Leadership
• Leaders must be ethical in their own decisions
and actions.
• Leaders also have a responsibility to influence
others to make ethically sound decisions and to
behave ethically.
– Laws are not enough
– Organizational/governmental policies are not enough
– Good character is not enough
3
Why Good People Do Bad things:
What Fails
• Individual Character:
– Knowledge of Right and Wrong
– Only 1% of population are sociopaths,
remember this when you consider why ethical
lapses occur so often
• Management
– Written Codes of Ethics
– Written Policies and Procedures
• Laws and Penalties
8
Helping Good People
Do the Right Thing All The time:
What Works Best
• Ethical Leadership
• Strong Ethical Culture
9
The BIG Idea To Take Away
• There is a recognizable dynamic of human behavior called culture
that occurs in all organized human activity which shapes the
ethical decisions and actions of good people and can contribute to
whether these good people behave ethically or unethically.
• For better or worse, for most people the culture of the
organization exerts a more powerful influence over ethical
behavior than individual character and personality.
• In their role as leaders, leaders create and maintain the culture,
for better or for worse.
• You are responsible for the ethical culture of
your organization.
• Therefore, you share responsibility for ethical failures with the
10
individuals who behave unethically.
The Need for Ethical
Leadership
Recent Evidence
8
Ethics in Government Report
(https://www.ethics.org/research/nges-order-form.asp, 01/30/08)
• The bad news
– Misconduct across government as a whole is very
high — nearly six in ten government employees saw
at least one form of misconduct in the past twelve
months (higher at state and local level but over 50%
of federal employees observe violations)
– One in four government employees works in an
environment conducive to misconduct. In these
volatile situations, 90 percent of employees are likely
to observe misconduct in the future.
– The strength of ethical culture in government
workplaces is declining, while pressure to commit
misconduct is growing. Absent effective
interventions, misconduct is likely to rise more in
the future.
©2012
Ethics in Government Report
(https://www.ethics.org/research/nges-order-form.asp, 01/30/08)
• The good news
– More than 8 in 10 employees say that they feel prepared to
handle situations inviting misconduct.
– A sizeable majority (70 percent) of government workers who
observe misconduct report it to management. Furthermore,
this number has been increasing in recent years.
– When both a well-implemented ethics and compliance
program and a strong ethical culture are in place within a
government organization, misconduct drops by 60 percent, and
reporting rises by 40 percent.
– Governments’ risk of losing public trust can be mitigated.
– By many indications in this research, what seems to matter
most is the extent to which ethics is woven into the fabric of
everyday work life and decision-making in government.
©2012
Among state government
employees, all forms of misconduct
are at or above the national level.
©2012
Severe Risk of Misconduct
(https://www.ethics.org/research/nges-order-form.asp, 01/30/08)
• Conflicts of interest, employees put own
interests above the public interest
(state level 32%)
• Abusive or intimidating behavior
(state 26%)
• Lying to employees (state 28%)
• Internet abuse (state 20%)
• Improper hiring practices (state 20%)
©2012
High Risk of Misconduct
(https://www.ethics.org/research/nges-order-form.asp, 01/30/08)
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©2012
Misreporting of hours (19%)
Discrimination (state 19%)
Lying to stakeholders (15%)
Safety violations (14%)
Misuse of confidential information (13%)
Sexual harassment (10%)
Providing low quality goods and services (10%)
Environmental violations (9%)
Stealing (8%)
Alteration of documents (7%)
Alteration of financial records (7%)
Bribes (4%)
Fraud (intentional deception or other
misrepresentation of information) in
government is as common as in business.
(https://www.ethics.org/research/nges-order-form.asp, 01/30/08)
• Alteration of documents (G=8%, B= 5%)
• Alteration of financial records
(G=6%, B=5%)
• Lying (G=B=14%)
– To customers
– To vendors
– To the public
• Misreporting of hours (G=B=17%)
©2012
Ethics in Non-Profit Organizations
www.ethics.org
• The good news:
– Most non-profits have stronger ethical cultures than
any other sector. BUT
• The bad news:
– Conduct that violates the law or an organization’s
standards is increasing, violations in 2007 are
comparable to business and government
– Financial fraud is higher than in business
or government.
– Boards are not effective in setting ethical standards
for employees.
©2012
Ethics in Business, 2007
©2012
"Despite new regulation and significant
efforts to reduce misconduct and increase
reporting when it does occur,
the ethics risk landscape in American
business is as treacherous as it was
before implementation of the
Sarbanes-Oxley Act of 2002.”
Patricia Harned
President, Ethics Resource Center
Ethics in Business 2009
(www.ethics.org)
• Misconduct at work is down from 56% in 2007
to 49%.
• Whistle blowing is up from 58% in 2007 to 63% in 2009.
• Ethical cultures are relatively stronger, up from 53% in
2007 to 62% in 2009.
• Pressure to cut corners is down along with perceived
pressure to commit ethics violations, which is down from
10% in 2007 to 8% in 2009.
• But:
– 10% said their company had lowered ethical standards to stay in
business.
– 22% said the recession had adversely affected the ethical culture of
their company.
• An ethics bubble in 2009? Slightly better than 2007
• Bubbles burst!
©2012
Other Recent Research Findings
• According to a survey of 2,700 scientists by the British Medical Journal, 13 per
cent had first-hand knowledge of UK-based researchers deliberately altering or
fabricating data. (Financial Times, 01/12/12)
• 1/4 people observe unethical behavior once a week at work, 1/5 report being
pressured to behave unethically at work.
(2006, LRN Ethics Study)
• The percentage of employees who witnessed misconduct at work fell to a new
low of 45 percent in 2011. But the percentage of employees who perceived
pressure to compromise standards in order to do their jobs climbed five points
to 13 percent, just shy of the all-time high of 14 percent in 2000. (2011,
Business Survey, Ethics Resource Center)
• A strong ethical culture reduces unethical conduct, but very few organizations
have a strong ethical culture. (2007/08, Ethics Resource Center)
• The share of companies with weak ethics cultures has climbed to
near record levels at 42 percent, up from 35 percent two years
ago. (2011, Ethics Resource Center)
9
©2012
Was it better in the
good old days?
What is the trend?
Are we becoming more or less ethical?
22
“2011 Marred by Cheating
Scandals Across US”
Associated Press
December 31, 2011
Bob Schaeffer, a spokesman for the National
Center for Fair and Open Testing says “he’s seen
as many cheating stories this year as in the past
half-dozen years combined” and says “there have
been confirmed cases of cheating in 30 states and
D.C. in the last three years.”
http://www.google.com/hostednews/ap/article/ALeqM5gDySnPJR9uziw9cDi78pPq65D1qQ?docId=936b3fab8f4040b4a276ba5abe3ce841
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Latest Trends, January 2012
(http://www.essex.ac.uk/government/news_and_seminars/newsEvent.aspx?e_id=3880)
• British people are less honest than they were a
decade ago.
• Results of the survey indicate that taking drugs,
speeding, drunk driving, keeping found money,
and handling stolen property are all more
acceptable today than they were a decade ago.
• The only transgression of which people have
become less tolerant in the past decade was
cheating on public benefits.
• People under the age of 25 are more likely to be
dishonest than older counterparts.
How big is the problem?
The Cheating Culture
David Callahan
ETHICAL
LEADERSHIP
Leader(s)
Situation
Followers
ETHICS
How Do Leadership And Ethics
Become One?
• What is right and worthwhile?
Goals and objectives, purpose and 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 ethical culture: the leader’s
influence over the moral choices and actions
of others, the way we do things around here
16
Ethical Leadership Failures
• Widespread cheating in Atlanta schools reported
in 2011, same thing happened in Austin in 1997
• The sorry Side of Sears
• 152 West Point Cadets Dismissed In
Cheating Scandal
• U. S. Soldiers Abuse Detainees in Iraq
• Enron, Worldcom, ImClone
• Madoff and Stanford
• Medicaid Contract Breaches, Allegations of Fraud
• Randy “Duke” Cunningham
• Milosovic, Hitler, Idi Amin, Saddam Hussein, Pol 19
Pot, James Jones, David Koresh
WHY?
The first answer is almost always
“just a few rotten apples.”
29
Why do people behave unethically?
• They are bad people.
• They have weak or bad character.
30
Rotten apples?
31
Case One
Corporate Kleptocrats
And
Corrupt Public Officials
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Integrity Among Business Leaders
(Business Week, Aug 26, 2002)
• One of eight executives is at high risk for integrity
problems, according to executive search firm, Russell
Reynolds (1400 in sample)
• They don’t believe the rules apply to them
• They show extreme lack of concern for others
• They rarely possess feelings of guilt
• There are enough narcissistic and sociopathic leaders
in business to be of concern
33
Rotten apples?
Or rotten barrel?
34
Case Two
Weak or Unethical Cultures
Only 1% are sociopaths; therefore, 99% are
men and women who should know better.
So why do good people do bad things?
35
What other factors might affect whether people
behave unethically?
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Excessive competition
Pressure to perform from leaders or others
Over emphasis on measuring performance quantitatively
Experience of high levels of unmanaged stress (e.g., budget cuts, due to
uncertainty, ambiguity, poor information, or rapid change)
Economic dependence
Opportunity
Think they can get away with it
Self-interest and ethical fading
Hard to detect violations or compliance
Don’t know the standards or expectations
May perceive that leaders are not always ethical
Individual values not aligned with organizational or community values
Feel as though they are mistreated, not valued, or not respected by leaders
Leaders don’t want to hear bad news or dissenting views
Something in the setting unleashes otherwise controllable impulses or
36
negative traits
The Ethical Responsibilities of
The Leader
The distinguishing mark of leadership and
executive responsibility is influencing the
moral behavior of others.
Chester Barnard
The Functions of the Executive, 1938
37
Where Senior Leaders Set the Right Culture,
Ethical Pressure and Retaliation are Reduced
Impact of Strong Senior Leadership on Retaliation and Pressure
(Data from ERC’s 2007 National Business and Government Ethics Surveys)
Government
Sector
Private
Sector
53%
60%
60%
51%
40%
38%
40%
31%
20%
20%
9%
7%
9%
7%
0%
0%
Strong
Ethical
Leadership
Weak
Leadership
Retaliation
Strong
Ethical
Leadership
Pressure
Weak
Leadership
38
The Ethical Culture: Influencing The
Actions of Others
• The example of leaders
• Gain support and commitment from everyone to shared
values, influence moral development of others
• The quality of leader-follower relationships
• Set expectations, clear guidelines, norms
• Monitor and mitigate competition and stress
• Invite and support expressing differences of opinion
• Reward ethical behavior
• Punish unethical behavior
• Neutralize potentially harmful contextual forces such as
excessive competition, greed
39
REVIEW
Take Aways
40
Why Good People Do Bad things:
What Fails
• Individual Character:
Knowledge of Right and Wrong
• Written Code of Ethics
• Written Policies and Procedures
• Laws and Penalties
41
Helping Good People Do
the Right Thing All The time:
What Works Best
• Ethical Leadership
• Strong Ethical Culture
42
The BIG Idea To Take Away
• There is a recognizable dynamic of human behavior called culture
that occurs in all organized human activity which shapes the
ethical decisions and actions of good people and can contribute to
whether these good people behave ethically or unethically.
• For better or worse, for most people the culture of the
organization exerts a more powerful influence over ethical
behavior than individual character and personality.
• In their role as leaders, leaders create and maintain the culture,
for better or for worse.
• You are responsible for the ethical culture of
your organization.
• Therefore, you share responsibility for ethical failures with the
43
individuals who behave unethically.
Leadership and Ethics
Always do right. This will gratify
some people and astonish the rest!
Mark Twain
44
Thank you for
your attention.
Questions?
45
46
Leadership and Ethics:
Ethical Examples
• Aaron Feuerstein, President/Owner,
Malden Mills Industries
• Alice Soliwoda, FedEx Employee
17
What do these examples
have in common?
• Integrity
– Recognition of an ethical issue
– Something at risk
– Courage to act
18
Trends in Business Ethics
• 2001: Enron hits bottom.
• 2007: Research shows unethical behavior is as bad as
before Enron collapsed along with others like World
Com and Adelphia, despite the passage of SarbanesOxley reforms. (Ethics Resource Center or ERC)
• 2009: An “ethics bubble” with less unethical
behavior than in 2007 develops. (ERC)
• But bubbles burst!
• 2011: Research shows increased pressure to
compromise standards to meet expectations and an
increase in companies with weak ethical cultures.
10
(ERC)
Recent Research Findings
• 1/3 of scientists admitted to unethical research practices in last three years.
(2005, Nature)
• According to a survey of 2,700 scientists by the British Medical Journal, 13 per
cent had first-hand knowledge of UK-based researchers deliberately altering or
fabricating data. (Financial Times, 01/12/12)
• Unethical behavior is common in government at all levels.
(2008, Ethics Resource Center)
• Fraud is higher in non-profit organizations than business or government.
(2008, Ethics Resource Center)
• 1/4 people observe unethical behavior once a week at work, 1/5 report being
pressured to behave unethically at work.
(2006, LRN Ethics Study)
• The percentage of employees who witnessed misconduct at work fell to a new
low of 45 percent in 2011. But the percentage of employees who perceived
pressure to compromise standards in order to do their jobs climbed five points
to 13 percent, just shy of the all-time high of 14 percent in 2000.
(2011, Business Survey, Ethics Resource Center)
• A strong ethical culture reduces unethical conduct, but very few organizations
have a strong ethical culture. (2007/08, Ethics Resource Center)
• The share of companies with weak ethics cultures has climbed to near record
levels at 42 percent, up from 35 percent two years ago.
9
(2011, Ethics Resource Center)