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The Ethical Leader PARM

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 “Actions speak louder than words” First, let’s tell a story

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The Ethical Leader PARM

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  1. The Ethical LeaderPARM John Lasky jwlasky@aol.com

  2. 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 • “Actions speak louder than words” • First, let’s tell a story • Second, let’s review the “traps” • Disconnected Leader • Compromised Leader • Non-trusted Leader • Disliked Leader • Oblivious Leader • Third, let’s talk about actions

  3. A Tale of Two Companies

  4. 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"

  5. 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?

  6. 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

  7. 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?

  8. 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”

  9. a. The Disconnected Leader: Lost Touch

  10. a. The Disconnected Leader: Lost TouchRecentDDI study: What are employees’ needs?

  11. The Workplace DisconnectHoward, Erker and Burce. Selection Forecast. DDI. 2007

  12. 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

  13. Dilbert gets it.

  14. b. Compromised Leader: Cracks under Pressure

  15. 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.

  16. % 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% In fact, the problem may be worse. Survey of U.S. parents regarding teaching our children: 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

  21. d. Disliked Leader

  22. People We Most Enjoy Being Around • Friends • Relatives • 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: Customers • Second form last: Co-workers • Dead last: Boss

  24. e. The Oblivious Leader

  25. a. Oblivious Leader: Art Imitates Life

  26. Let’s Sum Up • Questions regarding ethics with: • Youth • Business operations • Public perception • Question: • Is unethical behavior inevitable? • Answer: • It’s up to you

  27. “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

  28. Enough about the difficult ethics landscape Let’s talk about what we can do

  29. eth·ics [eth-iks] • 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

  30. 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.

  31. 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

  32. 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.

  33. 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

  34. 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.

  35. 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.

  36. 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.

  37. 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.

  38. Dimensions of Executive Ethical Leadership Moral Person:Moral Manager: (leader’s behavior) (directs followers’ behavior) - Traits - Role Modeling honesty, integrity, trust visible ethical action - Behaviors - Rewards/Discipline openness, concern for people, holds people accountable personal morality for ethical conduct - Decision-making - Communicating values-based, fairconveys an “ethics/values” message Linda K. Trevino, Ph.D.. Smeal College of Business, The Pennsylvania State University. 2005

  39. 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).

  40. Let’s get more specific

  41. 1. Choose the right people

  42. 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.?

  43. 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”

  44. 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

  45. Don’t Fall Intothe Trap • How do interviewers prepare for conducting interviews? • Informal OTJ training 48% • Instinct 44% • Attended class with skills practice 27% • Attended a class 27% • Read a book 18% • None 16% • Online course 7% DDI, Are You Failing the Interview, 2009

  46. It ain’t what you don’t know thatgets you in trouble. It’s what youknow for sure that just ain’t so. Mark Twain

  47. 2. Base decisions on values.

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