The Ethical Leader
PARM
John Lasky
jwlasky@aol.com
Today
•
“Workplace ethics” is much more than a belief – it is a
set of things to do
–
–
The “belief” part is critically important
But knowing the importance of actions is not enough
•
•
•
First, let’s tell a story
Second, let’s review the “traps”
a.
b.
c.
d.
e.
•
“Actions speak louder than words”
Disconnected Leader
Compromised Leader
Non-trusted Leader
Disliked Leader
Oblivious Leader
Third, let’s talk about actions
2
A Tale of Two Companies
3
Ford Motor Company
• Pinto edict: not an ounce over 2,000 lbs, and not
a cent over $2,000
• Ford was aware of a defect:
– In test crashes over 25 miles per hour, the gas tank
always ruptured
• But, no “fix” because (Mark Dowie. "Pinto Madness.“ 1977) :
–
–
–
–
Ford owned the patent on a much safer gas tank, but
Ford had already invested in the assembly line
Decision: make the Pinto anyway, "even though.“
Ford delayed the “fix” for eight years: “its internal 'cost-benefit
analysis, which places a dollar value on human life, said it wasn't
profitable to make the changes sooner."
• Note Lee Iacocca: "Safety doesn't sell"
4
Ford Motor Company
• Ford Pinto crashes: estimated 500 deaths
– Maybe as many as 900
• Did anyone go to Iacocca and tell him?
– "Hell no," replied an engineer who worked on the
Pinto,
– "That person would have been fired. Safety wasn't a
popular subject around Ford in those days. Whenever
a problem was raised that meant a delay on the Pinto,
Lee would chomp on his cigar, look out the window
and say 'Read the product objectives and get back to
work.'"
• Moral: Ford leadership focused on its
internal requirements and lost sight of those
of its customers – or was it worse?
5
Johnson & Johnson
• “Tylenol Scare” in 1982
–
–
–
–
–
Seven users died in the Chicago area
Extra Strength Tylenol deliberately contaminated with cyanide
Within a week, company pulled back 31 million bottles
The crime was never solved
Tylenol sales collapsed
• McNeil Consumer Healthcare (J&J) rebuilt/recovered
– Invented first inherently tamper-proof capsule: Tylenol Gelcaps
– Recaptured 92% of capsule sales lost after the cyanide incident
– Result: revolutionized the industry, and beyond
• Today
– Tylenol controls ~ 35% of pain killer market in North America
• On the ethics horizon
– Acetaminophen overdose is responsible for more ER visits than
any other medicine on the market
6
Let’s Compare Ford and J&J
• Which company had the cultural issue?
• What was that issue?
• How did that company get to such a
position?
7
Let’s Compare Ford and J&J
• Which company had the cultural issue?
– Ford: the ethical problem existed throughout
the process
• What was that issue?
– Pressure: scheduling, financial/business
objectives and survival
– Examine top leadership – the “mirror” effect
• How did Ford get to such a position?
– Devaluation of the ethical “compass”
8
a. The Disconnected Leader: Lost Touch
9
a. The Disconnected Leader: Lost Touch
Recent DDI study: What are employees’ needs?
Employee
Learn/Grow
Interesting Work
Good Manager
Rank
1
2
3
%
78
77
75
Proud of Entity
Advancement
Stability/Security
4
5
6
74
73
70
Creative/Fun Culture
Compatible Team
Work-Life Balance
7
8
9
67
66
65
10
The Workplace Disconnect
Howard, Erker and Burce. Selection Forecast. DDI. 2007
Job Seeker
Manager
Difference
Learn & grow
1 (78%)
3 (68%)
10%
Interesting work
2 (77%)
5 (63%)
14%
Good boss
3 (75%)
1 (69%)
6%
Organization to be proud of
4 (74%)
7 (58%)
16%
Opportunity to advance
5 (73%)
1 (69%)
4%
Stability/security
6 (70%)
6 (62%)
8%
Creative/fun culture
7 (67%)
9 (50%)
17%
Compatible work group
8 (67%)
9 (50%)
17%
Work-life balance
9 (65%)
4 (65%)
0%
Opp. for accomplishment
10 (64%)
8 (53%)
11%
Note: where does “external factors” (e.g., spouse moved, school) rank
11
as reasons employees quit? Managers: #1; Employees: #10
What do we leave on the table?
• What do we leave on the table?
• Engaged employees are:
–
–
–
–
–
130% more likely to excel at patient focus
63% more likely to excel in communication
26% more likely to maintain a safe work environment
300% more likely to attract, hire and retain top talent
70% more likely to reduce operational costs
(DDI, 2008 Driving Business Results)
• Replacing an employee is very expensive
– For example: to replace 1 Nurse costs $50,000
– At WPAHS, reducing nurse attrition by 1% saves
$1,700,000/year
12
Dilbert gets it.
13
b. Compromised Leader:
Cracks under Pressure
14
b. Compromised Leader: Cracks Under Pressure
•
•
•
•
1 of 8 feels pressure to compromise ethical standards.
About 1 of 3 employees observes misconduct at work.
1 in 3 fears retaliation from report of ethical concerns.
Managers’ perceptions about ethical behaviors in their
organizations are consistently more positive than those
of lower level employees.
• Virtually no differences in ethical perceptions among
employees of government, for-profits and non-profits.
- Ethics Resource Center, Washington, D.C., 2000
• 43% of employees admitted to having engaged in at
least one unethical act in the last year, and 75%
observed such an act and did nothing about it.
- John Maxwell, Ethics 101, p. 10.
15
16
In fact, the problem may be worse.
Survey of U.S. parents regarding teaching our children:
% of Parents who felt
it was ABSOLUTELY
ESSENTIAL
% of Parent who felt they
succeeded
To be HONEST & TRUTHFUL
91%
55%
To be COURTEOUS & POLITE
84%
62%
To have SELF-CONTROL &
SELF-DISCIPLINE
83%
34%
Adapted from: A Lot Easier Said Than Done: Parents Talk About Raising Children in Today’s America,
A Report from Public Agenda; Farkas/ Johnson/ Duffett/ Wilson/ Vine
17
In a recent Wall Street Journal article,
Psychology professor Steven Davis:
“Students say cheating in
high school is for grades,
cheating in college is for a career.”
Adapted from a presentation prepared by
L. Murphy Smith, Texas A&M University
18
c. Non-Trusted Leader:
Immediate Negative Reputation
19
More Statistics
In 2002, in the wake of Enron, Worldcom
and others, pollster George Barna asked
people whether they had “COMPLETE
CONFIDENCE” that leaders from various
occupations would “consistently make . . .
decisions that are morally appropriate.”
Here are the results:
20
c. Non-trusted Leader: Immediate Reputation
% Who Hold Public’s
Complete Confidence
Type of Leader
Execs of large corporations
Elected government officials
Film & TV producers, directors
& writers
3%
3%
3%
News reporters / journalists
5%
Small business owners
Ministers, priests, other clergy
Teachers
8%
11%
14%
Source: John C. Maxwell, Ethics 101
21
d. Disliked Leader
22
People We Most Enjoy Being Around
1. Friends
2. Relatives
3. Significant Other
Kahneman, D., et al (2004). A Survey for Characterizing Daily Life Experience: The Day
Reconstruction Method. Science. 306. 1776-80.
23
People We Least Enjoy Being Around
• Third from last:
• Second form last:
• Dead last:
Customers
Co-workers
Boss
24
25
e. The Oblivious Leader
26
a. Oblivious Leader: Art Imitates Life
27
Let’s Sum Up
• Questions regarding ethics with:
– Youth
– Business operations
– Public perception
• Question:
– Is unethical behavior inevitable?
• Answer:
– It’s up to you
28
“I have now been sucked down the
inevitable vortex of becoming my father . . . .”
Des Spence, General Practitioner, Glasgow.
“Off the Dial.” British Medical Journal . 2008
29
Enough about the difficult ethics landscape
Let’s talk about what we can do
30
eth·ics [eth-iks]
1. A system of moral principles: the ethics of a culture.
2. The rules of conduct recognized in respect to a particular
class of human actions or a particular group, culture,
etc.: medical ethics; Christian ethics.
3. Moral principles, as of an individual: His ethics forbade
betrayal of a confidence.
4. (Usually used with a singular verb ) That branch of
philosophy dealing with values relating to human
conduct, with respect to the rightness and wrongness of
certain actions and to the goodness and badness of the
motives and ends of such actions.
www.dictionary.com
31
Business
• Not long ago, “business” people bragged about
ruthless capitalism.
– Think about the 1980s, and 1990s
– Think about the impact on Pittsburgh
• But today: business = value creation and trade.
– Specifically, about creating value for stakeholders.
• At a minimum stakeholders include:
– Customers, employees, suppliers, communities, and
well as shareholders or other financiers.
• Focus: patients and employees.
32
Ethics
• Don’t miss the boat: “ethics” is NOT about
religion or rainbows. Nor is ethics a moving
target.
• Ethics always works at two levels: personal and
interpersonal.
• Ethics is about the most important parts of our
lives, and must be center stage—especially in
turbulent times.
• A quick comparison: hurricane Andrew
– Some people looted
– Others drove to Florida to help
33
The Role of Ethics and Values
• Ethics and values give us anchors, stakes in the
ground.
• They serve as stabilizers and shields.
• They empower and inspire us. They lead to
everyone pulling in the same direction.
• In short values and ethics can drive business
strategy.
R. Edward Freeman. Ethical Leadership in Turbulent Times. The Darden School. 2002.
34
It’s not so important to play so many notes, as to
mean the ones that you do play.
Warren Haynes, guitarist, Allman Brothers Band
35
Real Problems With Values and Ethics
•
•
•
•
We don’t always know our own values
The problem of bad faith
The problem of self deception
Values, ethics and action
R. Edward Freeman. Ethical Leadership in Turbulent Times. The Darden School. 2002.
36
The Amoral Leader
• Focuses on effectiveness.
• Often focuses on personal power and the
position of leadership.
• Is unconcerned about choices of the
followers.
• Values don’t count. Ethics don’t count.
Just get the job done.
• Very high human costs.
R. Edward Freeman. Ethical Leadership in Turbulent Times. The Darden School. 2002.
37
The Bottom Line of Ethical Leadership
• The ethical leader considers all elements at
once in searching for an outcome that considers
the values and ethics of the leader, followers,
and society as a whole.
• The ethical leader is inclusive, and seeks to
include others and to minimize “us” vs. “them”.
• The ethical leader tries to get the right things
done the right way, and fosters an open and
honest “ethics/values” conversation in the
organization.
R. Edward Freeman. Ethical Leadership in Turbulent Times. The Darden School. 2002.
38
The Ethics and Values Conversation
• Focus on purpose not profits.
• Relentlessness and consistency.
• The importance of challenges to values and
ethics.
• Make the conversation come alive.
• Make the ethics and values drive the systems.
• Make the ethics and values drive innovation and
change.
39
Dimensions of
Executive Ethical Leadership
Moral Person:
Moral Manager:
(leader’s behavior)
- Traits
honesty, integrity, trust
- Behaviors
openness, concern for people,
personal morality
- Decision-making
values-based, fair
(directs followers’ behavior)
- Role Modeling
visible ethical action
- Rewards/Discipline
holds people accountable
for ethical conduct
- Communicating
conveys an “ethics/values” message
Linda K. Trevino, Ph.D.. Smeal College of Business, The Pennsylvania State University. 2005
40
Conclusions
• Executive ethical leadership is
– Much more than traits (e.g., integrity)
• Think about ENRON
– Requires great care to create and sustain an
ethical culture that sends a consistent
message that is at least as powerful as the
“bottom line” drumbeat (via real attention to
ethics in multiple cultural systems).
41
Let’s get more specific
42
1. Choose the right people
43
Hiring
• Southwest Airlines
– “Culture” is the “glue that holds Southwest together”
– Completely values driven
– What results?
•
•
•
•
•
34 years of profits
Highest value/lowest debt
Highest retention, but not highest wages
Highest performance
Highly unionized, but never a strike
– Indeed, union pilots regularly load/unload baggage
• Never a layoff
• During that period, what happened to PanAm,
TWA, USAir, etc.?
44
What is SouthWest’s “Secret Sauce”?
• Be meticulous
• Hire ONLY “A” players
• Never compromise on a “B” or “C” player
– Better to leave the position vacant
– Why?
• Devote the necessary effort and energy
– Average of 25 interviews for 1 job opening
• Hire for “Values”
45
Never Slack Off
• 50% spend less than 30 minutes
conferring with other interviewers
– Often less than 10 minutes
– We devote more time to a single episode of
The Office or 30 Rock than to deciding who
we will work with for the next 5 years
• 24-79% don’t know it is unlawful to ask
about ethnicity, age, marital status,
disability
DDI, Discover the New Targeted Selection, 10/20/09
46
Don’t Fall Into the Trap
• How do interviewers prepare for conducting
interviews?
–
–
–
–
–
–
–
Informal OTJ training
Instinct
Attended class with skills practice
Attended a class
Read a book
None
Online course
48%
44%
27%
27%
18%
16%
7%
DDI, Are You Failing the Interview, 2009
47
It ain’t what you don’t know that
gets you in trouble. It’s what you
know for sure that just ain’t so.
Mark Twain
48
2. Base decisions on values.
49
50
The Proposition
• Organizations that identify and embrace a
set of values – and bake those values into
all actions – out perform their competitors.
• Why:
– Leaders cultivate values
– Values establish acceptable Behaviors
– Behaviors establish culture
– Culture demands performance
51
For Example: Healthcare
Each Focused on Values
• Bronson Methodist Hospital
– Since 2001, highest overall patient
satisfaction (regional)
• Baptist Hospital, Inc.
– Since 1998, 99th %ile (Press Ganey) in- and
out-patient satisfaction in key areas
• Robert Wood Johnson
– Market share growth: cardiology from 20 to
30%, surgery 17 to 30%, oncology 13-30%
52
How to Foster Ethics at Work
 Continuously publish your values
 Emphasize top management’s
commitment to values.
 Publish an ethics code – and USE it.
 Establish compliance mechanisms.
Involve personnel at all levels.
 Train employees.
 Measure results – “live” the ethics.
G.Dessler, 2003
53
How to Foster Ethics at Work
 Include “values assessment” in . . .




On-boarding
Orientation
90-day assessment
Annual assessments
 Identify candidates’ values during the
interviewing process
54
Make Everyone
Responsible for Hiring
• Result:
– New hires will share your values
– Most effective “culture” changer
– Immediate “value-add”
• To managers and the organization
– Enables you to focus on the real issues
• Good-bye “80-20” rule
• Retirement tsunami
– Not just nurses and physicians
– Baby boom: 1946-1962 (“boomers” turn 64 this year)
– What does that mean to your unit? The hospital? The
patients?
55
We decided that we’d be willing
to change absolutely everything,
except our principles.
Chris Galvin, CEO, Motorola
56
3. Provide constant feedback
57
Employee Feedback
• Traditional method
– Once each year
– Managers hate it
– Employees believe it is unfair
– Frequent surprises
– In reality: it is a legal exercise
• Better method
– Quarterly, if not monthly
– Builds “A” players; helps remove less than “A”
players
58
4. Engage your staff
59
• What is the #1 desire of employees?
• How does that desire relate to ethics?
• By the way, employees can get the job
done.
60
• Set of things to do, at a minimum
– Give employees real voice
• Not just party planning
• Unit councils, charged with meaningful tasks
– Do so in a meaningful, regular manner
• If not scheduled, it will not happen
• Examples:
– Project team
– Patient satisfaction team
– Solution team (GM, NY: ↑ productivity; ↓ grievances)
• Develop a charter
61
• Hospital Case Study
– FY 08 (July 07): regularly missed budgeted volumes
resulting from patient flow process
– Specifically: in 4th Q FY07 /1st Q FY 08:
– Diverting over 50 patients a month
– ED in Code Red over 100 hours a month
– LOS for Admitted patients in ED > 11 hours
– Plan A: hire 20 nurses and more support staff
– $1.1 million
– Continuation of non-efficient process
– Plan B: Immediate plan of correction:
– Design an optimal patient flow process
62
• Results
– Code Red Reduction/Elimination
• In 2 months, code red hours decreased to 50 from
160hours
• In 3 months, to “0” (first time in 5+ years)
– LOS for admitted patients in ED
•
•
•
•
July ‘07: 11.48 hours
April ‘08: 5.69 hours
FY ‘08: 7.18 hours
FY ‘09: 6.14 hours
63
64
64
How to Practice Ethical Leadership
1.
Model the Way
•
•
2.
All eyes are on you
Garbage in = garbage out
Inspire a Shared Vision
•
3.
Define the future, align people with that vision, and inspire them – despite the
obstacles
Challenge the Process
•
4.
Maintaining the status quo – at times very important --is a clerical job
Enable Others to Act
•
5.
Know the “80-20” rule
Encourage the Heart
•
•
•
Employees will show up without your guidance
Excellence comes from employees’ giving more than their labor
Think about employees’ motivations
Kouzes and Posner
65
Practices that Build Culture
• Selecting the right people
• Orienting them to your organization
strategy and culture
• Developing business literacy that
integrates the ethics perspective
• Organizational communication
• Situational leadership
• Performance management
• Training and development
• Reward systems
66
Can we teach ethics?
To educate a person in mind
and not in morals is to educate
a menace to society.
Teddy Roosevelt
67
68
Discussion
69