Positive outcomes of ethical leadership

David Mayer, a professor of Management and Organizations at the University of Michigan, has reviewed hundreds of studies of employees and reports that in general, when employees believe that their leader is ethical, the employees are happier and more productive, more committed, and more ethical themselves, than employees who do not believe that their leader is ethical.

1. Ethical leadership leads to ethical followers

In his own studies, Mayer has found that leaders not only have to espouse ethical values, but have to role model ethical behaviour in order to spread ethical behaviour among their followers, and to reward or punish behaviour that agrees or disagrees with organizational values.

“Leaders set the ethical tone of an organization and are instrumental in encouraging ethical behavior and reducing interpersonal conflict from their subordinates.”

Therefore, reflecting on one’s core values and striving to be more ethical can have a positive impact on the working environment, and make the organization more successful.

2. Ethical leadership leads to followers’ commitment

In a study by Shukurat Bello from the University of Nigera, the author cites many studies in which organizations with ethical leadership was found to lead to higher levels of employee commitment than in organizations with less ethical leadership. Bello defines commitment as “as a state in which an employee identifies with a particular organisation and its goals and wishes to maintain membership in the organisation” and states that high levels of perceived ethical leadership lead: to employees being emotionally attached to the organization; to employees viewing staying with the organization as providing greater financial security than leaving; to employees have loyalty to the organization for moral or ethical reasons.

3. Ethical leadership generates greater profits

KRW International, a leadership consultancy company, conducted a survey of employees at 84 American organizations, to ascertain if the employees thought that the CEO of the organization possessed the following four qualities:

• integrity
• responsibility
• forgiveness
• compassion

These four qualities were chosen by the authors of the study because through numerous examples of anthropological literature, these four qualities were found to be universally positive traits of human character.

The employees’ opinions were then correlated to the profitability of the company by analyzing the average return on assets (ROA).  Interestingly, organizations with CEOs that possessed the above four traits in greater quantity had an average return on assets (ROA) of 9.35 percent. On the other hand, companies with CEOs that were rated low in these four qualities had a ROA of 1.93 percent.  This means that companies with CEOs who are viewed as being ethical are almost 5 times as profitable as companies with CEOs that are not!

CEOs in the negative group were characterized as ‘self-focused’, willing to lie for financial gain, willing to do damage to other people for their own success.  Employees at these firms reported that these CEOs “couldn’t be trusted to keep promises, often passed off blame to others, frequently punished well-intentioned people for making mistakes, and were especially bad at caring for people”.

An important take-away for leaders is that the CEOs in this study who needed to improve their character often did not know.  They did not perceive themselves in the same way that their employees saw them.  CEOs were asked to rate themselves, and those CEOs who were rated poor in the four qualities by their employees, rated themselves higher than their employees rated them.  Conversely, CEOs who were rated high in the four qualities rated themselves lower than the employees rated them.  Leaders must be honest with themselves in assessing their own qualities.

One method of getting to know yourself better is creating an environment where people can give you honest feedback, and taking that feedback seriously.  Someone that a leader might be receptive to might be a mentor.

The need for ethical leadership

There is a great need for ethical leadership.  After the Enron scandal, a great deal of attention was paid to ethical practices in corporate culture.  However, after several years had passed, a decline in ethical values was seen.  A report by the ‘Ethics Resource Center’ from 2007 entitled ‘An Inside View of Private Sector Ethics’ reported that:

• In the past year, half of employees surveyed had witnessed some sort of ethical misconduct
• Employees were usually afraid to report misconduct.  About 1 in 8 employees had experienced retaliation for reporting ethical misconduct.
• The number of companies making an effort to promote a more ethical culture was actually in decline.

In light of the various benefits of ethical leadership described above, the fact that ethical leadership is in decline should raise alarm bells in organizations.

References

https://hbr.org/2015/04/measuring-the-return-on-character?utm_campaign=Socialflow&utm_source=Socialflow&utm_medium=Tweet

http://webuser.bus.umich.edu/dmmayer/Published%20Articles/Mayer,%20Aquino,%20Greenbaum,%20%26%20Kuenzi,%20AMJ,%202012.pdf

http://ijbssnet.com/journals/Vol_3_No_11_June_2012/25.pdf

http://www.ethics.org/files/u5/The_2007_National_Business_Ethics_Survey.pdf

Models for Team Effectiveness

Many models have been proposed to better understand how teams work or don’t work.  Below, I describe 4 of these models:

• the GRPI model - 1977
• the Katzenbach and Smith model - 1993
• the Lafasto and Larson model - 2001
• the Lencioni model - 2005

The GRPI Model

This model is one of the oldest team effectiveness models, developed by Rubin, Plovnick, and Fry (1977).  The model consists of four elements: goals, roles, processes and interpersonal relationships.  The team should begin with a goal, define the roles, then the team members work together (processes), seeking to maintain harmonious interpersonal relationships.

• Goals:  The team must be clear about it’s purpose and the results that it desires to achieve.  Lack of goals can lead to conflict.  Considered the most important element of this model.
• Roles: Everyone on the team must know his or her responsibilities, authority, and accountability.  Lack of clarity about roles can also be a major source of conflict.
• Process:  Several processes must be in place for successful team functioning:  communication, methods for decision making, conflict management techniques, procedures and work flow,
• Interpersonal relationships: An environment must be fostered in which team members trust each other, care about each other.

Read more about the GRPI model here.

Katzenbach and Smith Model

The Katzenbach and Smith modelrecognizes the challenges of transitioning from an individualistic mode of working towards a teamwork manner of working. 

 The team can be assessed for 3 outcomes:

• collective work products
• personal growth
• performance results

which are located at the vertices of the triangle.  To achieve these outcomes, the team requires 3 elements:

• skills
• accountability
• committment

The functioning of the team may be assessed as being somewhere along this graph:

• Working group: Team members are functioning with individual accountability, not mutual accountability, and are aware that they are operating as individuals

• Pseudo-team:  Team members believe that they are functioning as a team, yet are still operating at the level of individual accountability.  Performance of a pseudo-team is worse than the performance of a working group.

• Potential Team:  The team members are beginning to function at a level of shared accountability, towards a common goal instead of individual goals.

• Real team:  The team has solidly achieved a common goal and shared accountability.

• High-performing team:  The team members are committed to each other’s personal growth and development.

LaFasto and Larson Model

Lafasto and Larson studied 600 teams and developed a set of five dynamics of teamwork and collaboration.

• team members: do team members have experience, problem-solving ability, openness, supportiveness, action orientation, and a positive personal style?
• team relationships: can team members give and receive feedback?
• team problem-solving:  how focused is the team?  is it a positive climate? is there open communication?
• team leader: does the team leader focus on the goal? ensure a collaborative climate? build confidence? demonstrate sufficient technical know-how? set priorities? manage performance?
• organizational environment: are there helpful management practices, structure and processes, systems?

Lencioni Model

Patrick Lencioni describes his model in a video lecture here.

Each of the 5 dysfunctions identified by Lencioni build upon each other.  The 5 dysfunctions of teams are:

• Absence of Trust - Team members do not possess vulnerability-based trust, cannot communicatet:  apologies, confessions of weakness/inadequacy, compliments, ask for help, accept criticism.  A leader must be able to accept that team members can be more skilled or more knowledgeable.  If a single member of the team does not possess trust, it can weaken to entire team.
• Fear of Conflict - Team members are not able to engage in debate, resulting in poor decisions.
• Lack of Commitment - An environment without open expression of ideas leads to team members not feeling invested in decisions.
• Avoidance of Accountability - Because there is no commitment to a plan of action, team members do not hold other team members to account.
• Inattention to Results - Because they are unaccountable to others, team members think only of themselves.

Summary of the four models

The four models have much in common.  All four models include mention of the relationships between team members, of open communication between them.  All of them make some mention of the clear definition of roles or accountability of team members to each other.

Interestingly, only the LaFasto and Larson model mentions the role of the team leader.  In this model, it is the team leader who clarifies the goal that the team is pursuing.  The team leader fosters a particular climate, which in other models is described as ‘fear of conflict’ or ‘process’, but only LaFasto and Larson’s model suggests that the primary inspiration for the environment rests with a single person.  Their model also suggests that it is the team leader who prioritizes for the team, choosing which actions are more important than others.  Finally, every member of the team is accountable to the team leader, because the leader manages performance.  It appears that the other models are missing the key role of the leader in the team environment.

References

Katzenbach, J. R. (1993). The wisdom of teams: Creating the high-performance organization. Harvard Business Press.

Lafasto, F. and Larson, C.  (2001). When teams work best. Retrieved from https://leadershiphq.files.wordpress.com/2011/02/when-teams-work-best1.pdf.

Quioxte Consulting.  (2011).  GRP Model: Introduction to the GRPI tool.  Retrieved from http://quixoteconsulting.com/News_articles/Topics/grpi.html.