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Leadership Ethics

By: Disraelli, Bakari, Jim, and


Leadership Ethics Defined

Ethics refer to standards of moral conduct, to judgments
about whether human behavior is right or wrong.
Gerald Miller

Ethics is central to leadership because of the nature of the

process of influence, the need to engage followers to
accomplish mutual goals, and the impact leaders have on
establishing the organizations values.
Peter Northouse

Those Who Dont Learn from the Past

On a sunny day in
January 28, 1986, the
shuttle Columbia was
A launch had never been
attempted in temperatures
this cold.
73 seconds into its flight,
the shuttle exploded

are Doomed to Repeat It.

On February 1, 2003,
NASAs Space Shuttle
Columbia broke apart
while returning to Earth.
Communications were lost
approximately 15 minutes
before the scheduled
Columbia disintegrated 40
miles above the earth.

Lessons Learned
In both cases:
The concerns of Junior
personnel were not
communicated to senior
management in a timely
Concerns that reached
senior management were
discounted or dismissed.

Lessons Learned
In both cases:
Most who did express
concern, backed off,
believing they lacked
sufficient evidence and
they also feared
retribution from
managers if
they were wrong.

Lessons Learned
"Challenger, like Columbia, was an
Institutional failure. That is, it wasn't just a
matter of the decision-making structure. It had
to do with the entire organization and its
culture, and the critical parts of that really
didn't get changed."
Diane Vaughan, author of ``The Challenger Launch Decision''

Group Exercise
Instructions: We will break up into 5 groups.
A scenario of an ethical dilemma will be
distributed to each group. Determine how you
would address the issue in your assigned
Duration: 10 minutes

Instructions: Each group will be asked to read
their scenario, discuss the decision that they
made, and explain why they arrived at that
Duration: 5 minutes per group.

Ethical Dilemmas in Leadership

Ethical Questions Leaders Must Consider

1. The Question of Honesty
2. The Question of Responsibility
3. The Question of Power
4. The Question of Loyalty

Are you Dealing Ethically?

Rushworth Kidder, author of How Good People Make Good
Choices, provides a 7 step model people can use to determine
if they are being ethical in their dealings with others:

Obey The Law

Front Page Test
Mom Test
Gut Test
Golden Rule Test
Greatest Good Test
Rule Test

Components of Ethical Leadership

Ethical Leadership
Moral judgments are critical to the
practice of leadership. Therefore, as
leaders, we have a responsibility to make
reasoned ethical decisions and to act on
those choices.

4 Components of Ethical Behavior

1. Moral Sensitivity
2. Moral Judgment
3. Moral Motivation
4. Moral Action

Examples of Unethical Leadership

Now that we have defined leadership ethics, looked
at components that make up ethical behavior, and
identified questions that ethical leaders must ask
themselves, lets examine what happens when
leaders conduct themselves unethically.

Political Ethics Violations

Congressman Michael Myers

Caught in the FBI bribery
investigation Abscam.
1 of only 2 Congressmen to be
expelled since the Civil War.
Convicted of bribery after
accepting $50,000 from an
undercover FBI agent.
Coined the phrase: Money
talks in this business and
bullsh*t walks.

Congressman James Traficant

Convicted in 2002 of 10
federal counts of bribery,
racketeering, and tax evasion.
Sentenced to 8 years in federal
Expelled from Congress for
ethics violation on a 420 1
vote (the dissenting vote was
from Gary Condit).
The second Congressman to be
expelled since the Civil War.

Business Ethics Violations

Adelphia Communication
Americas 6th largest cable
Company executives produced
false documentation to hide debt
and obscure the financial
condition of the company.
Key members of the company
leadership have been arrested on
charges of defrauding investors
and using company money as a
source of personal income.

John Rigas, CEO - Adelphia

Misappropriation of Funds:
Built a $13 million golf
course on personal property.
Paid for Manhattan
apartments for family
Covered hundreds of
millions of dollars of the
family's stock losses.

John Rigas, CEO - Adelphia

Misappropriation of Assets:
Provided company airplanes
for an African safari and
other trips without
reimbursing the company, or
disclosing the transactions to
board members or investors.

Executive officers have been
implicated in schemes to hide
off the book partnerships and
corporate losses from
Resulted in the largest largest
corporate collapse in history .
Employees retirement that
were tied to Enron stock were

Kenneth Lay, CEO - Enron

Misinformation to Employees
Told employees in late 2001
that Enron stock was an
incredible bargain. In
actuality, he had been tipped
off that a potential scandal
was on the horizon.

Tyco International
Worth $3 billion in 1992, when
Dennis Kozlowski is named
Due to questionable
accounting, and lack of
management oversight, the
company reports losses of $1.9
billion in 2002.
Tyco is forced to cut more than
11,000 jobs and close 300

Dennis Kozlozski, CEO - Tyco

Federal Charges:
Tax evasion
Grand Larceny
Various Securities and
Exchange Commission

Dennis Kozlozski, CEO - Tyco

Dennis Kozlozski, CEO - Tyco

State Charges:
Tampering with Physical
Falsifying business records
Sales Tax Violations

Dennis Kozlozski, CEO - Tyco

Dennis Kozlozski, CEO - Tyco

Misappropriation of Assets:
$6,000 for a shower curtain
$11 million for art / furnishings
$18 million decorating bill for
his duplex in New York
$19 million, interest-free loan
from Tyco to purchase a home.
$2.1 million trip Sardinia for
his wifes birthday party.

Dennis Kozlozski, CEO - Tyco

Highlights of the $2.1 million
birthday party for his wife:
Live Jimmy Buffet
Performance ($250,000)
Gladiators & Chariots.
Ice sculpture of
Michelangelo's David
spewing vodka from its groin.

ImClone Systems, Inc.

company dedicated to
developing medicines for
cancer patients.
Stock prices plummeted
upon the FDAs
announcement that its new
drug, Erbitux was rejected
due to a faulty trial design.

Samuel Waksal, CEO - ImClone

Admitted to insider trading.
Indicted of Bank fraud by
using ImClone securities that
he no longer owned in order
to secure his bank loans.
Sentenced to seven years in
prison and will have to pay
over $4 million in fines and
back taxes.

Martha Stewart, ImClone Stockholder

Alerted by stockbroker,
Douglas Faneuli, to sell her
shares of ImClone prior to the
FDA announcement.
Attempted to block a probe
into her sale of the stock by
paying her stockbroker to
withhold information.
Indicted on federal charges of
conspiring to obstruct a probe
into her stock sales.

Martha Stewart
Ozwald Correctional Facility Inmate #97N909

What is Each Leaders Legacy?

Developing a Leadership Principle

Determine your legacy
Develop a mission statement

Integrate/Practice your mission

statement in everyday encounters

Behind Enemy Lines


Thanks You For Your Attention