Business Ethical Leadership in Asian Century Dr Attracta Lagan

Today’s Focus

Talk about business ethics & promote shared understanding of the term West & East

Provide opportunity reflect on your own ethical stance – personal, organisational & societal

Look at some of the challenges in understanding Asian perspectives

Talk about ethical leadership

Suggest ways of safeguarding your organisation’ ethics & responding to times

Business Ethics vs Individual Morality Ethics is examining moral standards of a person, a company or a society to decide whether these standards are reasonable and to apply them to contexts and issues.

Morality refers to how individuals make judgments about right & wrong.

Who decides what’s ethical?

Society Decides

What’s Ethical (CSR) Corporate Social

Responsibility Sustainability ( with

formally endorsed Chinese

Government

Institutional integrity - do

organisational systems support

stated values?

Do employees understand values /codes and when to apply them?

Is the common good protected?

Where are you starting from? An organization can only be as ethical as it’s employees

Leaders can have different personal and work standards

Every employee possesses ethical leadership qualities

Organizational culture is the lengthened shadow of the people at the top

Ethical people will behave unethically

Success without ethics... is failure

True or False

True or False

True or False

True or False

True or False

True or False

Bad Apple/Bad Barrel Cultural Checklist

Personal Level

Pressure to conform

Compliance Priority

Blame cultures

Ignorance of Ethical Implications

Self Interest

Psychological Disengagement

Systems Level Lack of ethical leadership – do as I say not as I do; expediency rules

Unprofessional managers

Diffusion of responsibility

Group Commitment

Poor underperformance management

Lack of Consequences

Sense of Entitlement

Ethical Conduct in the Information Age

Sexual Harassment & Family Issues

Worker’s Rights (Unjust Dismissal)

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Ethical Behaviour at Work

Privacy Protection Discrimination

Occupational Health & Safety

Whistle-Blowing Corporate Governance & CSR

Ethical Conduct in Marketing & Advertising

Trade secrets and Conflict of Interest

Product Safety

Ethics in Finance

Environmental Protection

International Business Ethics

Ethical Behaviour

Business Ethics @ Work How organisational culture corrupts

‘What is right in the corporation is not what is right in a man’s home or in his church. What is right in the corporation is what the guy above you wants from you. That’s what morality is in the corporation.’

- Robert Jackall, Moral Mazes

Models of Ethics Management

Unethical/Immoral Management

Circumvent the law; absence of ethical

Principles and accountabilities

Ethical/Moral Management

Conforms to high standards of ethical behavior

Amoral Management

Intentional: does not consider ethical factors

Unintentional: casual or careless about ethical factors

Conflict of Interest • Conflicts of interest are inevitable as leaders have have wide

personal networks and can encounter situations where

loyalty might conflict the integrity of their position.

• Leaders need hone skills not to avoid conflicts of interest,

but to manage values tensions to minimise harm.

• The last person to spot a conflict of interest is the person

engaged in it. Conflicts that are obvious to others often

blindside the person concerned

• Conflicts of interest are actual and perceived. The perception

of self-dealing can be just as damaging as the real thing.

Know your time Western Perspective

In interconnected world anything you do in private can find its way into the public domain

Legislators around the world insist business leaders accept accountabilities for the types of organisational cultures and ethical risks that emerge under their stewardship

People listen with their eyes and take their lead from what gets rewarded

Newly enacted US and UK legislation makes business leaders (not employees) accountable for corrupt corporate behaviour

2011 research amongst 144 global organizations found the top 3 challenges:

•Getting employees to speak up about ongoing concerns

•Getting leaders to demonstrate ethical leadership

•Establishing an ethical culture

Learning from current reputational crisis – BP, Rio Tinto, Citibank, Siemens, HSB, Federal Reserve Bank; AWB, Goldman Sachs…

• It can no longer be assumed that people know the right thing to do; a company’s reputation is too valuable to be left to chance

• Strengthening your ethics infrastructure is an essential part of modern business success and is the collective responsibility of all leaders

• Your brand value is as strong as the weakest link within your operations

• What’s legal often falls short of what’s ethical and leaves reputations vulnerable

$ Image

You are a senior manager with a reputation for fairness and being open minded. In amongst the dozens of emails you receive daily, you receive some that are humorous, which of course you ignore most of the time. However, you have just received an email that has pornographic images in it, albeit intended to be funny. You find this one offensive; you also know that the sender has a reputation for crude language and using inappropriate nicknames for his female colleagues. What do you do?

What would you do?

Delete the email. You are too busy and you expect these things in an industrial environment.

Ring the individual and tell him you don’t appreciate receiving material

of this nature and to stop sending this stuff. Go to the individual’s manager, a peer of yours, and tell him that he

should speak to him.

Forward the email to the Director HR and make a formal complaint.

• Where is your company’s line in the sand?

• How do your leaders model ethical behaviour and set the ethical tone?

• Why might good people in your company do unethical things?

• What do existing ethical challenges look like?

• How do you protect the values associated with your company?

• How are your values promoted, measured and rewarded?

How do you currently rate in managing the ethical dimension?

Business Ethics

Business Ethics involves learning what is right or wrong as defined by the organisation and then doing the right thing even when the ‘right thing’ costs.

How to justify the decision taken?

How to resolve the issue / case?

How to identify what is important?

Doing the right thing? The ‘Western’ way is individualistic and results-oriented. From this perspective individuals are responsible for what happens in their lives and organizations. The ‘Eastern’ way accepts reality the way it is. This is ‘Tao’: observe nature and see that change is inherent in everything. Individuals change in response to other changes nothing is black and white rather it is relative to the context. There is an external locus of control and the collective is more important than the individual and social etiquette can trump business loyalties/ interests .

Know your time Eastern Perspective

East knows more about the West than West does about the East. West is seen as arrogant and judgmental. Younger generations educated in the west and fluent in English

Social order is respected and governments have more legitimacy and authority than in the West

Giving and receiving “Face” and family obligations are critically important

Both Chinese & Indonesian governments have signaled they are clamping down on black corruption

Solid business relationships can only be build on solid social relationships first.

Heidenheimer

Class A Black Corruption

• bribe, fraud, embezzlement, extortion, tax evasion, smuggling ‘economic crimes’

Class B Grey Corruption

• abuse of institutional power to further self interests; extravagance or waste public purse

Class C White Corruption

• ‘common practice’ of social life including nepotism, favouritism, preferential treatment. Creating & maintaining networks of personal relations to seek and give favourable treatments

Global Standards and Accountabilities

The 1991 U. S. Federal Sentencing Guidelines for Corporations

UK Bribery Act

Companies signed to the UN Global Compact (over 3,700) Commits participating businesses of the Global Compact to “avoid bribery, extortion and other forms of corruption” and to “develop policies and concrete programs to address corruption”.

Australian Criminal Code 2004 states that a corporation can be held criminally responsible if it is established that "a corporate culture existed within the body corporate that directed, encouraged, tolerated or led to non-compliance with the relevant provision" or by showing that "the body corporate failed to create and maintain a corporate culture that required compliance with the relevant provision"

Beyond Leadership- Ethical Leadership

Leaders find ways to talk about ethics ofte

• Connecting what is right & wrong with goals, purpose & direction

The How is as important as the what

• How business is pursued is not left to chance & managed rigorously

People Matter

• Trust, respect, dignity, reciprocity

Inspiration & engagement

• Ethical leaders get others to lift their standards so the whole becomes more than the sum of its parts an ethical climate prevails

Ethics at Work – The Reality

The ethical side of workplace decisions do not take care of themselves

Ethical issues need to be anticipated, confronted, discussed and managed

Organisational values need to guide our ethical decisions at work

Accept you have a choice & personal accountability

Make informed choices

Be prepared to stand up and be counted

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Evaluating the Right Thing to Do

Individual Perception

Time Dimension

Context Dimension

Stakeholder Dimension

©Managing Values

Ethical Decision Making Model

Step 1. Define the problem

Step 2. Identify and consider stakeholders

Step 3. Identify relevant legislation, underlying values and policies

Step 4. Specify and evaluate alternatives

Step 5. Get another opinion from an informed person

Step 6. Make a decision and act

Thankyou Dr Attracta Lagan

www.values.com.au Attracta@values.com.au