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Bibliography 1
ANNOTATED BIBLIOGRAPHY
LEADERSHIP, ETHICS, AND COMMUNICATIONS:
FOUNDATIONS OF A SUSTAINABLE ORGANIZATION
By:
Bryan Hill
MNGT 6000
Webster University
Bibliography 2
Annotated Bibliography
This annotated bibliography contain articles, reviews, and other items on the subjects of
organizational leadership and communications, and related topics such as ethics, integrity, social
responsibility, scriptures from world religions, and how these subjects apply to various
organizational functions. This annotated bibliography is not an exhaustive list of articles which
were reviewed, as a substantial number of other articles were found to be pertinent and quite
excellent. However, the following have been included to provide information for the reader.
Critique of Article No 1
Mathis, R. L., & Jackson, J. H. (2008). Human Resources Management (12th
ed., pp. 21-25, 239-
240). Mason, OH: Thompson Southwestern
The authors make several points in discussing the relationship of ethics and integrity to
communications and leadership at the strategic and organizational levels—specifically within the
context of how an organization‘s human resources department can play a key role in ensuring the
success of each attribute. Mathis and Jackson (2008) find that:
On the strategic level, organizations with high ethical standards are more likely to
meet long-term strategic objectives and profit goals….[and to be] viewed more
positively by individuals in the community and industry, as well as by consumers
and employees….translat[ing] into bottom-line financial results and the ability to
attract and retain human resources (p. 21).
Mathis and Jackson, like many other researchers and authors, stress that ―the primary
determinant of ethical behavior is organizational culture, which is the shared values and beliefs
in an organization‖ (p. 22). This culture, as they point out, directs how those within the
organization make decisions. They also state that there are ―four elements of ethics programs‖
Bibliography 3
which, if they are implemented and actively pursued, will create an ethical organization. They
are: (a) ―A written code of ethics and standards of conduct;‖ (b) ―Training on ethical behavior for
all executives, managers, and employees;‖ (c) ―Means for employees to obtain advice on ethical
situations they face, often provided by HR;‖ and (d) ―Training for confidential reporting of
ethical misconduct or questionable behavior‖ (Mathis & Jackson, p. 23). These suggestions are a
common theme among those who know how to establish and maintain an ethical organization.
Some others may expand on these basics, but these are common.
The authors use UPS, the delivery company, as an example of an organization that
―delivers [on] ethics and corporate integrity‖ (Mathis & Jackson, p. 23). As a matter of fact, for
UPS, ethics is a principal way to achieving competitive advantage in the marketplace (p. 23).
And, as the authors suggested, it is also one way UPS hires and retains the kind of employees
they feel will fit their culture. Each employee, upon being hired, receives a detailed ―code of
conduct manual….includ[ing] specific examples of ethical situations that employees may face
and how to respond to them‖ (p. 23). UPS updates the code of ethics manual on a regular basis
and the code is ―reinforced annually through training session and communications‖ (p. 23).
Again, communications is a key to ensuring successful ethics, integrity, culture, and leadership.
As has been suggested in other articles, UPS has a hotline established some employees
may call to voice ethical concerns or to report on unethical practices they have witnessed. For
UPS, this hotline is operated through an external contracting agency which compiles the
information, sends it to UPS‘ ―special compliance department [within HR]…where
investigations and follow-up are handled….[and then given as] [r]egular summaries…to
department managers and senior executives‖ (Mathis & Jackson, p. 23). To learn from past
Bibliography 4
mistakes and further reduce the occurrence of unethical practices, on an annual basis at UPS,
―managers complete a ‗conduct code‘ report that asks specific question about ethical problems
that have arisen during the year‖ (p. 23).
From the perspective of Mathis and Jackson, ―[o]rganizations that are seen as
ethical…have longer-term success….[and] human resources is the ‘keeper and voice‘ of
organizational ethics‖ (p. 23). Beyond just what is legal for an organization to do, the question of
ethics ―pose[s] fundamental questions about fairness, justice, truthfulness, and social
responsibility‖ which cannot be written into comprehensive laws which cover every situation (p.
23). To help the individual in making ethical decisions, the authors suggest asking himself or
herself to important questions. ―Does the behavior or result meet all applicable laws, regulations,
and government codes? Does the behavior or result meet both organizational standards and
professional standards of ethical behavior?‖ (p. 24).
The authors also turn to a quick discussion of the Sarbanes-Oxley Act—passed after the
Enron crisis—as the act applies to human resources. Congress passed the act ―to make certain
that publicly traded companies followed accounting controls that would reduce the likelihood of
illegal and unethical behaviors‖ (Mathis & Jackson, p. 25). According to the authors, the biggest
concerns revolved around ―executive compensation and benefits‖ (p. 25). The act also specifies
that all publicly-traded organizations establish codes of ethics, set up ethics hotlines, and ―have
anti-retaliation policies for employees who act as whistle blowers…‖ (p. 25). As another
byproduct, organizations now have increased ―verification processes‖ which check against
untruthful reporting of employee hours (p. 25).
An additional step that many organizations take is to administer tests which ―asses the
Bibliography 5
honesty and integrity of applicants and employees. Employers use these tests as a screening
mechanism to prevent the hiring of unethical employees, to reduce the frequency of lying and
theft on the job, and to communicate to applicants and employees alike that dishonesty will not
be tolerated‖ (Mathis & Jackson, p. 239). Currently, about 28% of organizations are employing
the use of honesty and integrity tests—however, organization must ensure they ―relate the test
content to specific job content;‖ otherwise a successful suit may be brought against the
organization for invasive questioning and discrimination (pp. 239-240).
An additional point brought out by Mathis and Jackson involves ethics and the
multinational or global organization. Because different nations have different cultural, legal, and
political views, and because they may also have different views on what is ethical and what is
not, global organizations have to take into consideration not only their own ethical values, but
those of the country in which they are conducting business. This can become tricky. In some
nations, it is common practice to bribe officials to get anything done, or done in a timely fashion.
It may even be legal in that country to adopt practices which are not legal at home. But just
because something is legal does not mean it is ethical. It may be customary to present a business
official with a gift in one part of the world, but U.S. laws have strict limitations on what can be
done in this regard, and so the U.S. organization must still respect U.S. laws. An organization‘s
legal department should be able to help leaders to make the ethical (and legal) decisions
necessary. In fact, ―the Foreign Corrupt Practices Act (FCPA) prohibits U.S. firms from
engaging in bribery and other practices in foreign countries that would be illegal in the United
States‖ (Mathis & Jackson, p. 22). For this reason, many global organizations either completely
disallow any practices of bribery or gift-giving or, as in the case of giving gifts, have very strict
Bibliography 6
guidelines set in place on how much can be given, to whom, and in what context; plus full
reporting must be done. As the authors state, these bribery and gift-giving practices can give an
unfair advantage to competitors from other nations which don‘t have laws which restrict such
practices overseas. Those organizations are able to conduct business more quickly and able to
secure more favor through the commonly accepted bribery and other practices.
With the above in mind, the authors point out that U.S. organizations must ―make ethical
distinctions between bribery and gift-giving, particularly given differences in business practices
in various Asian and Eastern European countries.
Critique of Article No 2
Thompson, A. A., Jr., Strickland, A.J., III, & Gamble, J. E. (2008). Crafting and Executing
Strategy: The Quest for Competitive Advantage: Concepts and Cases (16th
ed., pp. 10-11,
24-29, 338-341, 420-422, 435). Boston: McGraw-Hill Irwin.
The authors implore organizational leaders to make sure, when selecting between
possible organizational strategies, to choose ones that ―can pass the test of moral scrutiny;‖ in
other words, that the strategies only contain actions which fall in the ―should do‖ category and
not the ―should not do‖ category, and that the action ―allows management to fulfill its ethical
duties to all stakeholders‖ (Thompson, Strickland, & Gamble, 2008, pp. 10-11). The authors
make a good point in addressing the fact that sometimes strategies seem to fall in a ―gray zone‖
in between what logically seems ethical and what logically does not seem ethical. It is during
those times where decisions will be made based on ―how clearly the boundaries [have been]
defined‖ (Thompson, et al., p. 10-11).
In discussing senior executives, the authors say that those with ―strong ethical
Bibliography 7
convictions are generally proactive in linking strategic actions and ethics: They forbid the pursuit
of ethically questionable business opportunities;‖ expect all employees to embrace and follow
those ethics; establish ―organizational checks and balances…to monitor behavior;‖ enforce the
ethics and codes of conduct; ―provide guidance…regarding any gray areas;‖ and are ―genuine,
not hypocritical‖ (Thompson, et al., 2008, p. 10-11).
Shifting gears away from ethics, which allow for the use of these topics in the paper, the
authors make a good distinction between an organization‘s strategic vision and its mission: ―A
strategic vision portrays a company‘s future business scope (‗where we are going‘), whereas a
company‘s mission typically describes its present business and purpose (‗who we are, what we
do, and why we are here‘)‖ (Thompson, et al., 2008, p. 24). The authors also state that, ―An
effectively communicated vision is a valuable management tool for enlisting the commitment of
company personnel to actions that get the company moving in the [common] intended direction‖
(p. 25). Also, ―Strategic visions become real only when the vision statement is imprinted in the
minds of organization members and then translated into hard objectives and strategies‖ (p. 26).
The focus placed here on strategic visions and missions is that organizations often have their
ethics built into these visions and missions; and the same statements just made hold true for
making the organization‘s ethics and values embedded in the culture and lived by the
employees—they need to be made tangible and get all employees on the same sheet of music,
granting there will always be some employees who prove the undesirable exception and should
be released from the organization. The authors give a half-dozen examples of vision statements
by highly recognizable companies, of which is that of Charles Schwab, which states: ―To provide
customers with the most useful and ethical financial services in the world‖ (p. 26). This
Bibliography 8
illustrates their emphasis of ethics within their strategic vision.
The authors also discuss a term known as ―strategic inflection points,‖ which are points
along the path of an organization where it is determined that ―change‖ is needed and where
―tough decisions [need to be made] about the company‘s course‖ (Thompson, et al., 2008, p. 26).
The changes are often specifically identified by internal or external organizational development
(and change) practitioners, or perhaps a combination of the two, whose job it is to determine,
alongside the senior executives, what problems exist within the organization, what changes need
to be made, how to go about making those changes and instituting them (and generally
embedding them in the culture), and then measuring the rate at which the changes are being
embraced and implemented, and the effectives of those changes on bringing about the desired
results. As mentioned many times previously through this annotated bibliography, unethical
decision making and practices often lead to situations which tear an organization apart and also
cause a loss of reputation. It is at these times, in particular, that a change agent—an
organizational development (OD) practitioner—is needed.
As ethics are involved in an organizations strategy, objectives, culture, decision making,
and organizational development and change, it is useful here to view the author‘s idea of what
constitutes ―the payoffs of a clear vision statement:‖ (a) ―it crystallizes senior executives‘ own
views about the firm‘s long-term direction;‖ (b) ―it reduces the risk of rudderless decision
making;‖ (c) ―it is a tool for winning the support of organizational members for internal changes
that will help make the vision a reality;‖ (d) ―it provides a beacon for lower-level managers in
forming departmental missions, setting departmental objectives, and crafting functional and
departmental strategies that are in sync with the company‘s overall strategy;‖ and (e) ―it helps an
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organization prepare for the future‖ (Thompson, et al.,2008, p. 26).
The authors address ―linking the vision/mission with company values‖ and describe core
values as ―the beliefs, traits, and ways of doing things that…guide the pursuit of [an
organization‘s] vision and strategy, the conduct of company‘s operations, and the behavior of
company personnel‖ (Thompson, et al., 2008, p. 27). ―[T]he stated core values and ethical
principles are the cornerstones of the corporate culture‖ (p. 435). Thompson, et al., go on to state
that:
Values, good and bad, exist in every organization. They relate to such things as
fair treatment, integrity, ethical behavior, innovation, teamwork, top-notch
quality, superior customer service, social responsibility, and community
citizenship….built…around four to eight traits that company personnel are
expected to display and that are supposed to be mirrored in how the company
conducts its business (p. 27).
The authors say that some organizations only have ―window-dressing values;‖ they sound
nice when read, but aren‘t lived by the leaders or the employees—they aren‘t stressed or put into
practice. These organizations have stated values that seem to have been listed as a way of
checking off their list that they have some. However, in contrast, there are organizations where
―the values become the company‘s equivalent of DNA‖—―character, identity, and behavioral
norms‖ (Thompson, et al., 2008, p.28). Thompson, et al. (2008), further state:
In companies with long-standing values that are deeply entrenched in the
corporate culture, senior managers are careful to craft a vision, mission, and
strategy that match established values, and they reiterate how the values-based
Bibliography 10
behavioral norms contribute to the company‘s business success. If the company
changes to a different vision or strategy, executives take care to explain how and
why the core values continue to be relevant. Few companies with sincere
commitment to established core values ever undertake strategic moves that
conflict with ingrained values‖ (pp. 28-29).
The authors list several organizations and their core values—again, including ethical
actions. For Kodak, these include, amongst others: ―respect for the dignity of the individual,
uncompromising integrity, unquestioned trust, [and] constant credibility‖ (Thompson, et al.,
2008, p.28). At Home Depot, these include: ―giving back to the community [social
responsibility], respect for all people, doing the right thing, taking care of people, building strong
relationships, and creating shareholder value‖—committed to ethically creating wealth for the
shareholder (p.28). Toyota includes ―respect‖ and ―quality‖ [there is an ethical obligation to do
your best]; DuPont includes ―ethics, respect for people, and environmental stewardship;‖ Heinz
includes ―Empowerment…to empower our talented people to take the initiative and to do what‘s
right,‖ as well as ―respect‖ and ―integrity‖ (p.28).
Returning to the discussion of organizations which have ―a wide gap…between [their]
stated values and [their] actual business practices‖ (Thompson, et al., 2008, p. 29) are the
author‘s examples of Enron, Arthur Andersen, WorldCom, and others. To quote the authors,
Thompson, et al., state that:
Enron…touted four corporate values—respect, integrity, communication, and
excellence—but some top officials engaged in dishonest and fraudulent
maneuvers that were concealed by ‗creative‘ accounting; the lack of integrity on
Bibliography 11
the part of Enron executives and their deliberate failure to accurately
communicate with shareholders and regulators in the company‘s financial filings
led directly to the company‘s dramatic bankruptcy and implosion over a six-week
period, along with criminal indictments, fines, or jail terms for over a dozen
Enron executives. Once one of the world‘s most distinguished public accounting
firms, Arthur Andersen was renowned for its commitment to the highest standards
of audit integrity, but its high-profile audit failures and ethical lapse at Enron,
WorldCom, and other companies led to Andersen‘ demise—in 2002, it was
indicted for destroying Enron-related documents to thwart investigators (p. 29).
Thompson, et al (2008), also give their two-pointed argument for why an organization
should have an ethical strategy: ―[a] because a strategy that is unethical in whole or in part is
morally wrong and reflects badly on the character of the company personnel involved and [b]
because an ethical strategy is good business and in the self-interest of shareholders‖ (p. 338). The
first has been greatly discussed already. For the second, Thompson, et al., suggest there are three
levels of ―business costs‖ of unethical business decisions and actions:
Level 1 costs [include] government fines and penalties; civil penalties arising
from class-action lawsuits and other litigation aimed at punishing the company for
its offense and the harm done to others; [and] costs to shareholders in the form of
a lower stock price. Level 2 costs [include] legal and investigative costs incurred
by the company; costs of providing remedial education and ethics training to
company personnel; costs of taking corrective actions; [and] administrative costs
associated with ensuring future compliance. Level 3 costs [include] customer
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defections; loss of reputation; lost employee morale and higher degrees of
employee cynicism; higher employee turnover; higher recruiting costs and
difficulty of attracting talented employees; adverse effects on employee
productivity; costs of complying with often harsher government regulations (p.
339).
Returning to culture, the authors distinguish between those organizations which have
―strong cultures‖ and those with ―weak cultures.‖ The overall point being that those
organizations with a strong culture often have a harder time in having those cultures changed.
Therefore, if an organization has a strong ethical culture, then the organization will generally
produce ethical decisions and actions. Whereas, if the organization has a strong culture, but that
culture does not focus on ethical decision making and actions, it is often an unethical
organization where change to ethical decisions and practices will be much harder to implement.
If the culture is weak, then whether it is weak ethically or unethically, the more dominant trait is
the one which will take precedence in action. The authors state that, ―In a strong-culture
company, culturally-approved behaviors and ways of doing things are nurtured while culturally-
disapproved behaviors and work practices get squashed‖ (Thompson, et al., 2008, p. 420).
Thompson, et al. (2008), also state that:
Three factors contribute to the development of strong cultures: [a] a founder or
strong leader who established values, principles, and practices that are consistent
and sensible in light of customer needs, competitive conditions, and strategic
requirements; [b] a sincere, long-standing company commitment to operating the
business according to these established traditions, thereby creating an internal
Bibliography 13
environment that supports decision making and strategies based on cultural
norms; and [c] a genuine concern for the well-being of the organization‘s three
biggest constituencies—customers, employees, and shareholders (p. 421).
The one positive to an organization with a weak culture is that it is usually much easier to
then go in and change the culture—especially important if the culture has somewhat unethical
practices; the culture may not be so firmly entrenched and, therefore, the leaders and employees
may be more willing to make necessary changes—to becoming an organization with firm ethical
values (Thompson, et al., 2008, pp. 421-422).
Critique of Article No 3
Shockley-Zalabak, P. S. (2006). Fundamentals of Organizational Communication: Knowledge,
Sensitivity, Skills, and Values (6th
ed., pp. 118-122, 373-374). Boston: Pearson—Allyn &
Bacon
Ms. Shockley-Zalabak identifies the difference between ‗values‘ and ‗ethics.‘ Of values,
she says they are ―that which makes something desirable, a subjective assessment of worth that
motivates human behavior and serves as a yardstick against which we measure choices‖
(Shockley-Zalabak, 2006, p. 118). According to this definition, values are not inherently moral—
simply desirable and esteemed important enough to prod one into action. However, ethics,
according to Shockley-Zalabak, ―although related to values, are the standards by which
behaviors are evaluated for their morality: their rightness or wrongness‖ (p. 118). She goes on to
apply this to communication, stating ―ethics are the moral principles that guide our judgments
about the good and bad, right and wrong, of communication, not just communication
effectiveness or efficiency‖ (p. 118). For example, there is a lack of communication ethics in the
Bibliography 14
practice of false advertising—speaking half-truths, deceptive photographs, misleading credit
terms, bait and switch advertising versus in-store supply. Although not discussed in her work in
this book, Enron senior executives lacked communications ethics when they continued to suggest
to their employees and stockholders that it was a good time to buy Enron stock, while secretly
selling their own in advance of the collapse.
Ms. Shockley-Zalabak summarizes the work of several communications researchers and
academics in providing definitions of ethical communication. Summarizing the 1976 work of
DeVito, she states, ―in contrasting ethical and unethical communications, [DeVito] suggests that
ethical communication supports individual choice based on accurate information about
alternatives. Unethical communication prevents individuals from acquiring needed information
important for choices….[U]nethical behaviors include lying, extreme emotional appeals, and
preventing communication‖ (Shockley-Zalabak, p. 119). Further summarizing Ms. Shockley-
Zalanak, in 1991, Redding ―categorize[d] common organizational messages that he classifies as
unethical….[into the following]: coercive, destructive, deceptive, intrusive, secretive, and
manipulative messages [which, according to Redding] all violate important ethical standards‖ (p.
120).
Hence, Enron senior executives were guilty of more than just lying, they were guilty of
―preventing [stakeholders] from acquiring [accurate financial] information important for
choices‖ to buy or sell stock to protect their investments and retirements (Shockley-Zalabak,
2006, p. 119). Enron stakeholders were not given ―accurate information about alternatives‖—the
alternative of buying stock, which is to sell it (p. 119).
Additionally, the 1968 work of Paul Keller and Charles Brown states that ―growth and
Bibliography 15
development‖ of an individual are made possible when there is an environment of ethical
communication (Shockley-Zalabak, 2006, p 119). The antithesis of this truth can be seen in an
environment of deception, sharp criticism, and backstabbing—in this environment it is harder for
one to have positive, productive growth and development.
Ms. Shockley-Zalabak states that organizations are made up of individuals and a variety
of interpretations of what constitutes ethical behavior. More than that, professional organizations
may have their own value systems—such as the American Medical Association, the Society for
Human Resource Management (SHRM), or the Organization Development Network. These
values systems also come into play as employees may be members of these professional
organizations and may also adhere to their standards for ethical conduct and practices. The
human resources professional may have his or her own personal values and ethics, but also bides
by the ethics of the SHRM—both in addition to the ethics and values which are imbedded in the
culture of the organization.
She also gives a good summation of the conflict between differing views of ethics. To
quote Ms. Shockley-Zalabak (2006):
Employees have individual value systems and make individual judgments about
the rightness or wrongness of communication behavior. Even in organizations in
which openness is encouraged, an individual employee may choose not to notify a
supervisor of a serious mistake. The individual judges this behavior as ethical
because of his or her intent to correct the problem. The employee‘s supervisor, on
the other hand, may consider it unethical to withhold information that could affect
the productivity of the group. An absolute judgment about the rightness or
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wrongness of the employee‘s behavior is difficult. It is possible to understand,
however, that individual and organization values can differ, contributing to
different interpretations of ethical behavior‖ (p. 120).
In 1985, Rebecca Rubin and Jess Yoder, building upon the 1955 work of Karl Wallace,
identified ―four habits‖ of ethical organizational communications. First, the ―habit of search [is]
[e]thical communication that willingly explores the complexity of any issue or
problem….[which] requires generating valid information and evaluating new and often
controversial findings‖ (Shockley-Zalabak, 2008, p. 122). Second, the ―habit of justice [is]
[e]thical communication that presents information as openly and fairly as possible with concern
for message distortion‖ (p. 122). Not only should the information be ―presented for maximum
understanding‖ without including in the message any unintentional slant toward a certain bias,
but also when the message is received, one should use the ―habit of justice [to] examine [one‘s]
own evaluation criteria and potential biases that contribute to distortion in meaning‖ (p. 122).
Third, the ―habit of public versus private motivations [is] [e]thical communication based on
sharing sources of information, special opinions, motivations, or biases that may influence
positions….[or to be more precise] [h]idden agendas are discouraged for both message senders
and receivers‖ (p. 122). Fourth, the ―habit of respect for dissent‖ [is] [e]thical communication
that encourages opposing viewpoints and arguments‖ (p. 122).
To summarize the above four habits, Shockley-Zalabak (2006) states that:
[I]ndividuals and groups are engaging in ethical communication behaviors when
they thoughtfully analyze problems and issues, are open to diverse types and
sources or information, conduct their deliberations openly without hidden
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agendas, and not only respect different viewpoints but also encourage
disagreement and dissent to produce superior ideas and solutions. From this
perspective, unethical organizational communication behavior suppresses the
examination of issues, withholds relevant information to pursue personal interests
or motivations, and uses dissent to press for personal rather than organizational
advantage‖ (p. 122).
Further, she states that the person who is actively involved in strategic communications
must balance ―personal responsibility with…broader…organizational ethical responsibilities‖
(Shockley-Zalabak, 2006, p. 373). Ms. Shockley-Zalabak informs the reader that:
Cheney and Christensen (2001) provide an important description of ethical—
moral issues related to strategic communication. [They] identify seven broad
issues with ethical, moral, and even legal implications resulting from planned
communication: the posited character or integrity of the source of the message;
the defensibility of a particular message; the legitimacy of a pattern or campaign
of messages; the practical impact of a message or the cumulative effect of a series
of messages; the openness of the structure of communication between an
organization and its publics/audiences; the articulation/representation of genuine
public interests; and the question of shared responsibility‖ (pp. 373-374).
She goes on to look at the messages that organizations impart during advertising and
marketing campaigns, stating that:
We have all questioned the truth of particular organizational messages.
Advertising claims are often exaggerated, with consumer complaints frequently
Bibliography 18
hidden from public scrutiny….Strategic organizational communication is an
intentional effort to shape our perceptions. Themes selected for marketing,
advertising, and crisis management may focus or frame an issue away from the
product or service to a more generally accepted societal good‖ (Shockley-
Zalabak, 2006, p. 374).
Ms. Shockley-Zalabak turns to liquor, gun, and tobacco manufacturers as examples of
crafting messages which steer away from public concerns that, if honestly addressed, might
cause a loss in sales. Instead, these manufacturers choose messages which bypass ―specific
product advantages or features,‖ or disadvantages, and instead talk about how the products
promote ―freedom, individuality…[and] fun‖ (Shockley-Zalabak, 2006, p 374). In this particular
section, Ms. Shockley-Zalabak closes by stressing the joint responsibility which must be
assumed by organizations and the public for ―ethical-moral evaluation of messages and their
potential influence‖ (p 374).
Critique of Article No 4
Wilson, S. (2002). Real People, Real Crises: An Inside Look at Corporate Crisis
Communications (pp. 15, 17, 22, 29, 37-39, 139-141, 144, 147). Winchester, VA: Oakhill
Press
―It can take decades for an organization [or a person] to build a good reputation, yet it can
be destroyed in just a few hours‖ (Wilson, 2002, p. 139). That is the focus of Chapter 11,
Reputation Management, in Mr. Wilson‘s book. A crisis can be naturally occurring and
externally-generated, such as an earthquake, or man-made and internally-generated, such as
embezzlement by a senior executive. The crisis itself may not have been the result of unethical
Bibliography 19
decision making, yet the way an organization handles the crisis can have ethical implications
and, therefore, implications for the leaders‘ integrity and the organization‘s reputation. When an
organization is undergoing a crisis, often the media is covering it and the public is following it.
―A company is never stronger than its reputation‖ (p. 139). Protecting the ―image‖ and
―reputation‖ of the organization is at ―the heart of crisis management communications‖ (p. 139).
Author Wilson (2002) says that ―reputation management and crisis management are
intertwined. A company that doesn‘t care about crisis management doesn‘t really care about its
reputation‖ (p. 139). Wilson also gives additional weight to crisis management over some other
organizational functions. He says that, ―Advertising, public relations, community relations, and
good business practices are important in managing corporate reputations. But when the chips are
down, crisis management is imperative‖ (p.140).
Wilson warns against disgruntled employees or former employees seeking ―revenge
or…attempting to correct perceived wrongdoings‖ by trying to destroy an organization‘s
reputation—regardless if whether what they claim is true or not (Wilson, 2002, p. 140). Other
stakeholders can try to do the same—such as customers or investors or suppliers. ―By destroying
an organization‘s reputation, people can destroy the organization itself, or at least severely
cripple its ability to function normally‖ (pp. 140-141). To interrupt the ability of an organization
to function—to produce or to serve—is to create a crisis for the organization; it breaks the
normal routine and forces resources to be diverted elsewhere to remedy the situation (p. 29).
In addition to trying to protect the reputation of an organization, one of the main
responsibilities of the crisis management communicator—usually the CEO or other senior
executive previously selected to act in that role—is to decide what is the message that needs to
Bibliography 20
be addressed to the public. Within this message should be three to five talking points which need
to be stressed during media interviews and press releases. Further, when interview questions
begin to take the organization‘s media spokesperson away from it message, or when more
investigation is needed to answer those questions, the talking points provide a bridge back to the
message. To assist in developing those talking points, and in managing a crisis, is why
organizations form crisis action teams and generate crisis management plans and crisis
management communications plans.
Leadership is essential. Communication is critical. So are integrity and ethics.
If an organization is going through a crisis, or has recently gone through a crisis,
particularly one involving a real or perceived ethical lapse and the tarnishing of the
organization‘s reputation, it should consider establishing ―a major goodwill campaign‖ (Wilson,
2002, p. 144) with its stakeholders, and the public in general. This is in addition to making actual
changes in the organization‘s practices, culture, and values so that the same stimulants which
created the crisis do not reoccur. According to Wilson, the goodwill campaign should include an
increase in ―speaking engagements, media interviews, and public appearances‖ (p. 144). He says
that, an organization should ―consider carefully every element of communication that [it]
control[s], whether…newsletters, magazine articles, letters, or email….to bolster [its] image as
much as possible‖ (p. 144). This also includes advertising.
There are a number of other important points about honesty, integrity, and
communication throughout his book. Wilson, in discussing one organization‘s preparation to
handle an environmental impact ―crisis,‖ states, ―We had made contacts with employees,
shareholders, government and community leaders, as well as the news media. We knew where
Bibliography 21
we stood on the issue and so did everyone else. The company believed in its position and it
believed it had done the right thing‖ (Wilson, 2002, p. 15). He says that, ―If you reduce crisis
management to its simplest form, it is this: Determine what is the right thing to do, and then
figure out how to do it‖ (p. 37). The leaders of the organization believed in their ability to make
ethical decisions. They were transparent on the issue with all stakeholders. They confronted the
crisis head-on, and they began immediate communications with stakeholders and the media.
Wilson, in talking about speaking with participants of the crisis management
communications workshops he conducts, says: ―I tell [them] about the importance of their first
response….what they do and what they communicate during the first minutes or first hours of a
crisis may well shape public opinion for hours, days, weeks, and possibly forever‖ (Wilson,
2002, p. 17).
Wilson (2002) suggests following some ―simple rules‖ to effectively and efficiently
―communicat[e] with the public during a crisis‖ (pp. 37-38): (a) ―Be absolutely open and
honest;‖ (b)―Less is better….Stay away from too many details….[which] just generate more
questions and increase the probability that you‘ll say the wrong thing;‖ (c) ―Take the lead and
take control….early, even if you‘re not 100 percent ready….If you wait, you‘ll just be reacting to
someone else‘s agenda;‖ (d) ―Speak with one voice….When times do call for more than one
spokesperson, make sure they‘re reading off the same page. Mixed messages are confusing and
lead to doubt and distrust and can undermine your credibility;‖ (e) ―Get outside the box. See
things the way others see them….Look at the crisis from the outside in‖ (pp. 37-38).
Further, in ―develop[ing] crisis management [communications] strategies,‖ Wilson
(2002) suggests leaders ask themselves three sets of questions (p. 39):
Bibliography 22
First: What do we know? What are the issues? Second: What are the concerns?
What are the questions? What will people want to know? [And], Third: What are
the actions we need to take? What are the messages we need to convey? (p. 39).
As a warning to answer questions honestly and ethically, and to be prepared with what
one is going to say when interviewed or conducting a press conference, Wilson (2002) says:
[B]e comfortable….Reporters…seem to have a sixth sense, almost a built-in lie
detector that sends out an alarm when the person they‘re interviewing gets a little
too nervous answering a question. In dealing with reporters, it‘s not just what you
say, but how you say it….[B]e believable (p. 22).
The same advice can be given when addressing all stakeholders—employees, board
members, investors, and others.
Returning now to Chapter 11, a final comment by Wilson (2002) on the subject of
reputation:
[N]o one should ever take a corporate or personal reputation for granted.
Reputations do not have a strong life of their own. They are fragile. They must be
nurtured, protected, and strengthened on a regular basis. They are far too valuable
to be ignored (p. 147).
Critique of Article No 5
Craig, S. & Lucchetti, A. (2008, November 17). Goldman Chiefs Give Up Bonuses. The Wall
Street Journal, pp A1, A16.
Seven executives at Goldman Sachs Group Inc., including CEO Lloyd Blankfein, may be
setting the standard for executives at other financial and mortgage institutions to follow by
Bibliography 23
requesting their organization not pay out to them ―tens of millions of dollars‖ in 2008 annual
bonuses. The organization is granting their request.
While the executives will each still be receiving their $600,000 base pay, they decided
that not taking the bonuses was ―‘the right thing‘ to do‖ in light of the current financial crisis.
The organization will still be giving bonuses to the hard-working ―lower-level‖ employees who
serve the organization. Paying bonuses will help to retain the employees who might otherwise
take their talent to another organization if they did not receive the extra pay. This same concept
is one of the main reasons organizations pay such high salaries and bonuses to their executives—
to keep other organizations from making money off of their talents.
While spokespersons for both Merrill Lynch and Morgan Stanley said that no decisions
on executive bonuses had been made yet at their organizations, many in the industry believe that
Lloyd Blankfein and Goldman Sachs is setting a precedent most other executives in the industry
will follow. John Mack, the CEO of Morgan Stanley, declined a bonus in 2007 because of the
organizations loss in the fourth-quarter last year.
Another reason why the executives on Wall Street may choose to follow suit and suspend
bonuses is because those bonuses, as well as salaries, are disclosed to the public. Organizations
need to win back the trust of the public—investors, and taxpayers footing the bill for the bailout.
There is a big concern that taxpayers, through the government-provided bailout loans, of which
Goldman Sachs and at least eight other companies are sharing $125 billion, may be paying the
bonuses of executives who have placed the economy where it is. Since 2002, $312 billion in
salaries, bonuses, and other benefits have been paid to employees of Merrill Lynch, Morgan
Stanley, Goldman Sachs, and Bear Stearns.
Bibliography 24
The current financial crisis came about, in part, because of the losses realized this year as
a result of securities which were backed by subprime mortgages which have been at a high
default rate. Other events which have triggered this crisis are the merger of Bear Stearns with
J.P. Morgan Chase; the buyout of Merrill Lynch by Bank of America Corp; and the filing for
bankruptcy protection by Lehman Brothers. During this time, Goldman Sachs has ―fared better
than other firms, but [still] its stock is down more than 60% this year.‖
Critique of Article No 6
Sorkin, A. R. (Ed.). (2008, October 22). A.I.G. to Suspend Millions in Executive Payments
[Electronic Version]. The New York Times. Retrieved October 22, 2008, from
http://dealbook.blogs.nytimes.com/2008/10/22/aig-to-suspend-millions-in-executive-
payments/
This article focuses on the decision by American Insurance Group (A.I.G.) to ―suspend‖
payout of $600 million reserved for 2008 executive bonuses—and a ―freeze‖ of the remaining
$19 million dollars due in contract severance to former A.I.G. CEO Edward Liddy, who was
―ousted‖ this past June—in response to actions taken by New York Attorney General Andrew
Cuomo to ensure that taxpayers are not funding 2008 bonuses for Wall Street executives through
monies A.I.G. will receive as part of a government bailout. Specifically, Attorney General
Cuomo had discussions with A.I.G. senior executives to construct the agreement, and followed
those discussions up with a formal letter to Edward Liddy, Chairman and CEO.
Speaking to reporters, Attorney General Cuomo said, ―‘Once a company accepts tax
dollars, there are different rules. These are taxpayers who did not voluntarily make an investment
in these companies. In many ways it was a forced investment.‖ He went on to say, ―‘There
Bibliography 25
should not even be any contemplation of bonuses for executive performance because I find it
hard to conceive of a situation that you could justify a performance bonus for management that
virtually bankrupted the company.‘‖
The article also identifies that it was A.I.G.‘s financial products unit, lead by Joseph
Cassano, which ―undertook many of the complex financial transactions that pushed the company
to the brink of collapse.‖ Mr. Cassano, who was fired, would have received $70 million from the
established bonus fund for 2008.
A.I.G. spokesman Joe Norton said, ―‘We have received the letter and the letter is
consistent with our discussion with the attorney general and with actions we have taken.‘‖
In the letter written by the attorney general, he says:
‗To be clear, it is my position that until the taxpayers are repaid with interest the
more than $120 billion that has been used in the rescue financing of AIG, no
funds should be paid out of these pools to any executives. As AIG recovers using
taxpayer money, these pools should not be used to reward executives ahead of
taxpayers.‘
The attorney general also says:
‘I believe that rebuilding trust in our capital markets requires executive
compensation packages that are rational, fair, and based on bona fide performance
measures that are disclosed to the public. We must ensure that executive pay
package structures no longer create improper incentives for executives to
overleverage their companies and manipulate the books for their own short-term
financial benefit.‘
Bibliography 26
Attorney General Cuomo ends the letter by saying, ―‘I applaud the different tone you are
now setting at AIG which augers well for the company going forward, and I hope it will set a
new standard for corporate culture at similarly situated firms.‘‖
Critique of Article No 7
Kiel, P. (2008, September 26). Insiders Detail How Bottom Line Drove Credit Ratings.
ProPublica.org. Retrieved October 22, 2008, from
http://www.propublica.org/article/insiders-detail-how-greed-drove-credit-ratings-926/
In this post, Mr. Kiel refers to a Bloomberg report written about a key link between the
―mortgage lenders who loosened lending standards and then passed the risk on to Wall Street,
where mortgage-backed securities became all the rage.‖ This link was ―the major credit rating
agencies, particularly Moody‘s and Standard & Poor‘s….[who] gave much of the risky securities
their highest credit rating [AAA], effectively preserving the illusion that they were risk-proof.‖
Although, ―[f]aulty analytical models and inadequate staffing played a role,‖ the primary
problem was that there was a conflict of interest—the ratings companies were supposed to grade
the investments based on their financial risk and their reward potential, but the companies made
their money grading the securities provided by the banks. If the customer (the banks) was happy,
then more business could be conducted; and if more business was conducted, then more money
was made. Also, when the ratings companies gave the securities high grades, such as the perfect
AAA gold standard, that was when the ratings companies made the most money. ―‘The ratings
companies earned as much as three times more for grading complex structured finance
products…as they did from corporate bonds.‘‖
This practice became the focus for these companies, beginning in 2000, according to
Bibliography 27
Bloomberg. At this time, according to a former manager for Moody‘s, ―one Moody‘s executive
‗visited Wall Street banking customers to pledge a closer, more cooperative relationship and
asked whether any of his analysts were particularly difficult to work with.‘‖
According to testimonies and e-mails secured by the Securities and Exchange
Commission (SEC), ―pressure‖ was put on the analysts at these companies to make the numbers
work to give the coveted AAA rating. ―‘My mandate was to find a way. Find the way,‘‖ said a
former senior analyst for Standard & Poor‘s. An SEC report has on record ―former analysts [who
admit] that the ratings were essentially fictional.‖ ―An analyst at [one] rating agency complained
that her firm‘s model didn‘t capture ‗half‘ of the deal‘s risk, but that ‗it could be structured by
cows and we would rate it.‘‖ On the record was Standard & Poor‘s managing director, Frank
Raiter, who admits to being ―told ‘to just guess‘ at the value of [the] complex securities, to ‗put
anything down.‘‖ According to Mr. Raiter, ―…if we could have hired a supreme being to tell us
exactly what the loss was on a loan, [the ratings agencies] wouldn‘t have hired him because the
Street wasn‘t going to pay us extra money to know that.‘‖
As reported by Bloomberg, and included in this post, here is a great summary of what
happened with how much money in these subprime loan-backed mortgage securities:
‘[T]he New York-based companies stamped out top ratings on debt pools that
included $3.2 trillion of loans to homebuyers with bad credit and undocumented
incomes between 2002 and 2007. As subprime borrowers defaulted, the
companies have downgraded more than three-quarters of the structured
investment pools known as collateralized debt obligations issued in the last two
years and rated AAA.‘
Bibliography 28
As written by one analyst in a 2006 e-mail, ―Let‘s hope we are all wealthy and retired by
the time this house of cards falters.‖
Critique of Article No 8
Ethics Scoreboard.com. (2004, February 21). Faint Whistle: Enron and Ethics. Retrieved
October 22, 2008, from http://www.ethicsscoreboard.com/list/enron.html
A brief article, information new to this paper include that Jeffrey Skilling lacked four key
leadership ethics: ―responsibility, competence, prudence, and accountability.‖ The article states
that, regardless of whether or not Skilling was guilty of breaking the law, his actions were still
unethical and morally corrupt. His lawyers pleaded on his behalf that he only took the advice of
lawyers and accountants, but the article rebuts that ―CEOs [don‘t] take orders from lawyers and
accountants,‖ they give them. ―A CEO like Skilling says [to the lawyers and accountants], ‗We
have this idea that seems to allow us to hide our losses without violating any laws. Will it
work?‘‖ The lawyers and accountants could have refused to be complicit, but they did not. The
article asks two pretty common sense questions, and follows up with answers which show some
of the results of this crisis. First: ―Should the accountants have independently refused to assist
Enron‘s scheme? Yes, and that is why, in a nutshell, there‘s no longer a firm called Arthur
Anderson‖. Second, ―Should the lawyers have taken steps to alert stock-holders? Yes…that‘s
why the SEC and the American Bar Association have developed new rules.‖ Yet, as the article
states, it is Skilling who is still ultimately responsible for his decisions, ―the actions of executives
under his supervision, [and] for the quality of lawyers and accountants he hires.‖
Critique of Article No 9
Gilman, S., DR., Hand, P., Dr., Navran, F., & Brown, J.. (2008). Ten Things You Can Do to
Bibliography 29
Avoid Being the Next Enron. Ethics Resource Center. Retrieved October 22, 2008, from
http://www.ethics.org/resources/avoid-being-enron.asp
The article suggests ten actions an organization can take to prevent unethical decision
making and actions on the part of any employees—Board, CEO, or line-level employee.
First, ―Examine your ethical climate and put safeguards in place.‖ Since all organizations
have cultures, whether purposely planned or not, an organization should examine their culture in
regards to ―attitudes, perceptions, values, standards of conduct, pressures to commit misconduct,
communications, risks and vulnerabilities.‖ The organization should make sure its corporate
values have been ―internalized‖ by ―all stakeholders‖—including the ―Board, senior leadership,
[and] employees at all levels.‖
The authors list three questions the organization should ask itself. ―Are employees
rewarded for succeeding at any cost or are they urged to be shepherds of the corporation‘s
reputation as well as its assets?‖ ―What pressures do they face to commit misconduct?‖ And,
―What systemic problems exist that could encourage good people to make bad decisions?‖
Second, ―Don‘t just print, post and pray.‖ The authors state that an organization‘s ―Ethics
Code‖ or ―Code of Conduct‖ is the result of the organizations ―missions, visions, strategies and
values,‖ and that if leadership takes the time to make sure the codes are ―thoughtful and
effective,‖ then the codes will ―provide guidance for making ethical business decisions that
balance conflicting interests.‖ The ―Codes of Conduct‖ should be ―living documents‖—capable
of being revised as needed, taken seriously, and respected and followed by all stakeholders,
beginning with the senior leadership of the organization. The authors remind the readers a very
simple, yet very common and important fact, ―Ethical lapses at the upper echelons of
Bibliography 30
management tend to be perceived as tacit permission to choose the ‗path of least resistance‘ at
lower levels.‖ Therefore, to set the best example, and to be able to expect the same ethical
commitment and actions from their employees without being hypocritical, leaders must ―hold
[themselves] to the highest standards of conduct….honesty, transparency and trustworthiness.‖
They must also ―refuse to tolerate misconduct among their peers,‖ employees, or any other
stakeholder. The authors also recommend the organization ―publish the Code [of Ethics or
Conduct] every year in [the] annual report.‖
Third, ―Build a robust ethics infrastructure that is self-sustaining.‖ The authors
recommend that, ―Corporations should have a committee of independent non-executive directors
on its Board of Directors who are responsible for ensuring that systems are in place…to assure
employee compliance with the Code of Ethics.‖ The systems include annual ethics ―staff
training,‖ evaluations of compliance systems, appropriate funding and staffing of the corporate
ethics office, and effective protections to employees who ‗blow the whistle‘ on perceived actions
contrary to the spirit and/or letter of the Code.‖ The ―effective protections‖ include hotlines that
can be called to leave anonymous tips or seek guidance in making ethical decisions. Here, again,
the authors stress that the Code of Ethics should remain ―dynamic‖ (―living documents‖) that can
be continuously updated to reflect new ethical issues.
Fourth, ―Publicly commit to being an ethical organization.‖ Here the authors state that
organizations which go public with their ethical commitments, as well as actions, have better
results is keeping ethical and are considered ―more trustworthy‖ by all parties than organizations
which ―stay silent‖ about the ethics and actions within the organization. Transparency is key.
They suggest issuing an annual ethics report and display the organization‘s ―vision, values and
Bibliography 31
codes of conduct on their Web sites.‖ Other locations not mentioned include prominently
displayed within stores, catalogues, brochures, office lobbies, break rooms, and elsewhere.
They suggest that, ―Every member of the Board of Directors…should…sign the Code of
Ethics and pledge…support…to the Code.‖ In addition, ―All outside law firms and auditing
firms that [serve the organization] should be required to sign…[and] understand…the
corporation‘s Code of Ethics.‖
Fifth, ―Separate auditing from consulting functions.‖ This removes both perceived and
actual conflict of interest. To directly quote the authors:
Allowing Arthur Anderson to both audit and consult with Enron created at least
an appearance of a conflict of interest. Subsequently, hiring Arthur Anderson
employees as Enron employees who then managed the affairs of their former
colleagues made this a real ethical conflict of interest. The independence and
integrity of financial auditing organizations are fundamental to the stability and
growth of…free markets throughout the world (Gilman, Hand, Navran, & Brown,
2008).
Sixth, ―Talk with employees at all levels…often!‖ The article states that, ―Failure to
communicate…can be fatal.‖ The authors discuss the concept of ―Managing by Walking Around
(MBWA),‖ and how it is a great tool for leaders and managers to ―communicate their (task and
ethical) expectations and requirements in daily, informal meetings with employees.‖ The authors
say that employees have two basic concerns regarding their jobs: ―what is expected or required
for them to survive and to be successful (tasks and ethics)….[and] to know ‗how they are
doing‘‖ at it. The authors also advise organizations to ―Communicate…Goals, Roles,
Bibliography 32
Expectations and Priorities.‖
Organizations should communicate to the employees the ―short term and long term goals
of [their] job….how their goals support the organization‘s mission and vision….[and to] tie
[those] goals to the code of conduct or code of ethics.‖ They suggest remind the employees that
―how you accomplish a goal is just as important as accomplishing the goal itself. Cutting corners
can hurt the corporation, its reputation and, eventually, the individual employee.‖
Regarding roles: ―Let employees know how their piece of the job fits into the bigger
picture. Remind them of their importance and value.‖
As for expectations, Gilman, Hand, Navran, and Brown, (2008) suggest organizations
should:
Be certain that employees understand exactly what you expect. What has to be
done? When? To what standards? How will it be evaluated? What should they do
if they encounter any roadblocks or unanticipated changes? How do you want
them to handle questions and /or ‗gray areas‘ where expectations may be unclear
or conflicting?
Remind your employees of the organization‘s operational priorities….Be
clear about what you expect them to do when they experience conflicts between
any of these core values. Clarify what constitutes ethical conduct.
Seven, ―Build ethical conduct into corporate systems.‖ ―Define‖ the ethics and values of
the organization. ―Train your employees on their ethical responsibilities….[and] [t]each people
how to translate the pledge into specific actions that support the pledge and build trust.‖ Devise
tools to measure or quantify how well your ethical code works. Also, as the authors suggest, if
Bibliography 33
employees ―live‖ the ethics, reward them; if they don‘t, then they should be fired.
Eight, ―Establish an Ethics Committee to constantly keep the organization focused on the
seven main provisions of the Federal Sentencing Guidelines of 1991…‖ The Guidelines state
that two senior-level personnel must be selected by each organization to be responsible for
ensuring organizational ―‘compliance‘‖ with their established ―‘standards and procedures.‘‖ In
accordance, the authors believe there are seven principal ―functions‖ that an ethics committee
should focus on:
Function One. Review the definitions of [ethical] standards and
procedures….[and] communicat[e]…[them] to employees….[to] ensure that
employees both understand and accept the ethics program.
Function Two. Assume responsibility for overall compliance….[and]
serve as the court of last resort concerning interpretations of the organization‘s
standards and procedures. When and if inconsistencies come to light in this
manner, the committee should make recommendations on improving the existing
compliance mechanisms. And, as always, there should be follow-up to ensure that
compliance recommendations have been understood and accepted.
Function Three. [B]alance the rights of individual applicants and
employees against the organization‘s need to avoid risks that come from placing
known violators in positions of discretionary responsibility. This includes the
oversight of background investigations on employees/applicants who are being
considered for such positions.
Function Four. Communicate the organization‘s [ethical] standards and
Bibliography 34
procedures….to ensure every employee understands and accepts the
organization‘s ethical guidelines….[and] provide regular training sessions…‖ In
addition, ―the ethics committee should solicit stakeholder input regarding how
standards and procedures are defined and enforced….[and the organization
should] create ways of providing proof that each employee has received the
appropriate documents and understands the standards and procedures described.
Function Five. Monitor and audit compliance….[to ensure] that the organization‘s
goals, objectives and plans do not conflict with its ethical standards and
procedures.
Function Six. Serve as primary agent for enforcement and discipline….to
ensure consistent responses to similar violations of [ethical] standards and
procedures (versus applying different standards to different employees based on
their position, performance, and function).
Function Seven. [E]nsure that offenses are not repeated. When violations
do occur, the ethics committee should have ways to identify why they occurred. It
is also important that lessons learned from prior violations are systematically
applied to reduce the chance that similar violations can take place in [the] future.
Nine, ―Choose to live your corporate values.‖ The authors suggest that if an organization
not only tells employees what the ethical values of the organization are, but also ―empower[s]
them to make decision based on those values, [then the organization] will free them to take
action even when specific guidance isn‘t readily available.‖
Ten, ―Keep the lines of communication open.‖ In this last recommended action, the
Bibliography 35
authors stress finding out what the employees think is ―going right,‖ ―going wrong,‖ and ―what
makes [them] uncomfortable in their jobs.‖ The authors state that, if the organization will do this,
then it will be able to determine what kind of potential unethical decisions or actions may be
committed. They also stress that ―ethical issues [must get] communicated up the corporate
ladder.‖ Finally, they advocate open and honest two-way communication at all times.
Critique of Article No 10
Rozycki, E. G., Ed. D. (1993) Leadership vs. Morality: An Unavoidable Conflict? (Widener
University) [Electronic Version]. In Philosophy of Education. The Proceedings of the
Forty-Ninth Annual Meeting of the Philosophy of Education Society (pp. 266-274). New
Foundations.com. Retrieved October 22, 2008, from
http://www.newfoundations.com/EGR/MoralLeadership.html
In this paper, Dr. Rozycki asks questions regarding whether leadership and morality are
mutually exclusive; whether the ―standards of judgment‖ required to be a ―heroic leader‖ is ―in
conflict with common notions of morality,‖ or being a ―moral leader.‖
Dr. Rozycki says that in addition to ―judgment,‖ the process of ―education‖ is also
involved. He says that people can be educated to be heroic leaders and they can be educated to
be moral leaders.
Dr. Rozycki states:
It is also a matter of whether one can learn to be a heroic leader, given the
constraints of acting morally. Or vice versa, whether one can learn to be a moral
person in the contexts of being called to heroic leadership.
According to Dr. Rozycki, people want organizations—their leaders and employees—to
Bibliography 36
do ―more good than evil,‖ which is why people look for ―moral heroic leadership.‖
Using the military and ―elite private educations‖ as examples, possibly errantly, Dr.
Rozycki says both stress heroic leadership as the goal for the leaders they wish to produce. In
these examples, Dr. Rozycki says that heroic leadership is promoted as:
…acting through organizations to get the job done
[through]….[l]eadership…stimulated by providing incentives to rule-
breaking….done cleverly enough to avoid getting caught in the act….[and] to
achieve a superordinate good, if only from the perspective of the immediate group
to which one belongs.
Dr. Rozycki gives an example of how a student at a prestigious board school can perform
a grandiose hoax that may get the student expelled, yet the precise ability to devise and pull of
the hoax gets the same student ―welcomed‖ at another prestigious school. Dr. Rozycki states
that, ―Rule-breaking done with wit and style can become a mark of distinction.‖ He also gives
the example of military recruits being told to get a job done, but not given the resources to
accomplish the mission, and that they are expected to use their intelligence to acquire the
resources, but that they are also not exempted from being punished should they get caught
stealing. ―In both cases,‖ states Dr. Rozycki, ―there is some sense that a ‗higher‘ good is served
by the competition that often subverts rules that govern ‗ordinary‘ situations.‖
Dr. Rozycki says that, in a study called ―The Romance of Leadership,‖ it was determined
that over a number of years, articles published in the Wall Street Journal, other business journals,
and even scholastic writings, considered a person to be a leader only when they achieved a goal
or accomplished an action of a high enough impact. ―Leadership is the management of the
Bibliography 37
important, even the near cataclysmic. Leadership is heroic.‖
As another example, Dr. Rozycki says that, often ―administrators‖—the word used to pull
―leadership‖ out of the equation—are considered to be ―leaders‖ when actions taken by others
within their organization have no direct ―cause and effect‖ relationship to those administrators.
He is basically saying that ―administrators‖ are considered to be ―leaders‖ when actions by
others yield positive results, and ―failed leader[s]‖ when the actions by others produce negative
results. Dr. Rozycki does not admit that all ―administrators‖ have as a natural duty, the
responsibility to ―lead‖ those who work for them and that, as such, some ―administrators‖
effectively lead their followers in a positive direction, using moral decision making, and that
other administrators equally effectively lead their followers in a negative direction through
unethical decision making. Dr. Rozycki also fails to factor in the responsibility of the leader to
help set the culture of the organization; to exemplify it; and to empower others to live it as well.
Regardless of the culture—whether moral or not—the ―leader‖ sets the tone from the top and,
just as children mimic their parents and learn through observation, some adults do not exercise
their personal responsibility for moral choices, and to break away from those bad examples, and
therefore follow those bad examples; whereas others believe that the actions taken by the leaders,
even if unethical, must somehow be generally acceptable as the right thing to do.
Dr. Rozycki states that, ―The basic risk of leadership is encountering interference with
one‘s effectiveness. The leader is expected to ‗break the rules‘ from time to time to achieve
greater goods. But only success justifies this ‗outlawry.‘ Even then, whether a ‗greater good‘ has
been achieved may be a matter of substantial controversy. It is difficult to be a leader, especially
in a pluralistic society.‖
Bibliography 38
To truly get to the kernel of Dr. Rozycki‘s philosophy—that there is something
―particularly disturbing about discussion of ‗moral, heroic leadership‖ and that the thought is too
―simple‖—the following two paragraphs are included in their entirety in order to preserve his
exact meaning:
Dr. Roczycki, in discussing morally defective organizations and leaders, says:
The mythos of heroic leadership seems to require that a ‗real leader‘ be the cause
or author of the organizational act. This leads to an interesting dilemma. One kind
of morally defective organization is one which prevents moral veto power by
individuals over organizational acts. Individuals other than the leader become
mere functionaries, instruments of the leader‘s will. An administrator can only be
a cause or an author of a organizational act, that is, a ‗heroic leader,‘ if his action
cannot be vetoed by his subordinates, i.e., if the organization is morally defective.
Thus, leadership presumes a morally defective environment of action.
Any action performed by one constrained from the exercise of moral
choice is ceteris paribus morally defective. So, even if the administrator‘s
command is morally correct, the organizational action will necessarily be morally
defective. But if the organization is not morally defective, i.e., each actor within it
may veto the administrator‘s cause or command on moral grounds, then the
administrator is not the author of the organizational act. The organizational act in
a morally non-defective organization is substantially the act of those moral agents
who execute it. Thus, the administrator‘s act, even if moral in such circumstances,
is not heroic leadership.
Bibliography 39
Dr. Rozycki states that organizations have as ―common ‗perversions‘‖ the facts that:
―solutions in one place create problems in others places; policies are not implemented;
inconsistency is tolerated; [and] there is duplication of effort.‖ He continues, ―The very viability
of the organization may require tolerance of deviance from what some may consider to be the
‗ideal.‘
Dr. Rozycki also says that, for the sake of managing society, leaders who are guilty of
crimes are punished as an example to the followers who are left free to be condemned by their
own guilty consciences. He uses, as an example, the execution of Nazi leaders after World War
II while thousands of followers were not punished.
Dr. Rozycki continues:
Given the basically pluralistic nature of any modern society, too much ‗morality‘
is probably counterproductive in terms of social control. Too strict an
enforcement of rules — moral or legal — might cause the kind of resistance
which eventually might bring the legitimacy of those rules into question. It is
interesting to consider that morality and social stability may compete with one
another. Fervent moralists, as we have long suspected, are closet revolutionaries.
Dr. Rozycki goes on to pose the question, why aspire to, or seek, heroic leadership? He
also discusses the subjects of: ―the problem with morality;‖ ―fixing the blame: the mythology of
fault;‖ and ―morality and social control.‖ Regarding ―the problem with morality,‖ Dr. Rozycki
states that, ―The most interesting dilemmas are those where good competes with good.‖ He does
not ask: who is it who should define what is moral?
Dr. Rozycki concludes by saying, ―Finally, the role of the moral, heroic leader, though
Bibliography 40
conflicted, and, even, ultimately, tragic, may best be understood as that of a teacher who
provides us with common understandings of the moral basis of social action.‖
Critique of Article No 11
Hancock, J. (2008). Enron: Innovation Corrupted [Review of the book Innovation Corrupted:
The Origins and Legacy of Enron’s Collapse]. InsideWork.net. Retrieved October 22,
2008, from http://insidework.net/resources/articles/enron-innovation-corrupted
This post by Jim Hancock is a review of the book Innovation Corrupted: The Origins and
Legacy of Enron’s Collapse, by Malcolm S. Salter, written for Harvard Business School‘s
Working Knowledge series. The book, itself, was written from research gained through court
documents released after the completion of the trial, as well as from public records. The book
also shows the involvement of others outside of Enron who helped to facilitate the corruption.
The following are quotes from Mr. Salter‘s book.
―Once Enron‘s ethical drift took hold, its collapse was only a matter of time.‖
Enron was an innovative company, and its downfall can be traced to
supreme arrogance bred by considerable success, some extremely poor
diversification decisions, and poorly conceived and implemented administrative
practices that led, over time, to reckless gambling and ethical drift. This drift was
facilitated by Enron‘s bankers and advisors and largely missed by its board of
directors and other watchdogs.
[S]upreme overconfidence and perverse financial incentives led to a
gladiator culture in which executives proposed—and risk managers and the board
of directors approved—a growing number of risky gambles with high expected
Bibliography 41
returns. Meanwhile, building on intense lobbying to encourage further domestic
deregulation and limit federal oversight of the energy industry, Skilling
encouraged Enron executives to exploit to the hilt recent Securities and Exchange
Commission rule changes as well as then-current tax rules.
To help disguise the company‘s deteriorating financial position, many
outside advisors and bankers either colluded in or acquiesced to these
questionable transactions. Enron‘s sophisticated risk analysis and control system
also experienced serious breakdowns. These breakdowns, along with
management‘s increasing aversion to truth telling, isolated the board from many
evolving realities. In addition, Enron‘s supernormal growth and skyrocketing
stock price made it difficult for most directors to challenge management‘s
strategy and tactics.
At Enron there were many opportunities for enormous personal gain that
distracted top executives from the essential tasks of maintaining institutional
integrity and building stable relationships with shareholders and employees.
In this vacuum, abstract definitions of purpose unrelated to corporate ideals,
distinctive competences, and organizational opportunities easily gave way to
uncontrolled criteria such as personal preference and opportunism.
Perverse incentives are legion throughout our system today. For example,
perverse incentives for both mortgage brokers and investment bankers helped
create the subprime crisis that we are now living through.
Mr. Salter also includes in the book many questions that leaders and others within
Bibliography 42
organizations who ask themselves about what happened and to serve as a check over themselves
and their own organizations. Seven were listed in the review. I have included four here which
reflect the themes of this paper:
Why did Skilling, at critical moments, treat differences of opinion,
pushback, and penetrating questions from both insiders and outsiders as either
stupid comments or narcissistic insults rather than opportunities for constructive
dialogue?
Why did Lay‘s espoused faith and Christian values fail to guarantee his
moral leadership and protect the enterprise from increasing immoral behavior?
How did Skilling and Lay imagine that their personal conduct could
influence the behavior of others within the company?
What internal images of personal leadership and stewardship did their
behavior reflect?
Critique of Article No 12
Csorba, L. (2006, April 7). Enron: trial reveals leadership, hiring brought company down
[Electronic version]. Houston Business Journal. Retrieved October 22, 2008, from
http://www.bizjournals.com/houston/stories/2006/04/10/focus2.html?t=printable
Mr. Csorba says that several of the most crucial lessons to be learned from the Enron
collapse were: ―building cultures of trust matter [but] leadership matters…most;‖ personnel
decisions can become costly; and that ―there is a canyon of difference between competence and
character.‖
Csorba says that people familiar with the culture and practices of Enron describe the
Bibliography 43
culture as one of ―manipulation, infighting, backstabbing and fuzzy math,‖ as well as ―greed,
distrust and deception,‖ where the word ―integrity‖ was constantly used but seldom practiced,
and where ―suspicious minds, not trusting hearts, ruled its organizational body.‖ Enron was a
place with ―a consistent manipulation of accounting rules, but also a pattern of careless
recruitment practice.‖ In short, Enron had an ―utter lack of leadership.‖
With the flavor of Scripture, Csorba says, ―Management constructed this house on the
sands of deception, lies and fraud, instead of building it on the solid foundation of trust and
transparency.‖
As proof that Enron‘s leader‘s ―words were hollow,‖ and that they weren‘t walking the
talk, Sherron Watkins, an Enron employee who testified for the prosecution during the trial of
Kenneth Lay, et al, said that notepads would be distributed by leaders, to employees, with the
following quote by the Reverend Dr. Martin Luther King, Jr., ―Our lives begin to end the day we
become silent about things that matter.‖ Csorba describes Watkins‘s reaction as one of
―bafflement.‖
Csorba discusses how Enron hired a ―turnaround guru‖ named Stephen Cooper to help
the organization through bankruptcy. However, Cooper found that ―99 percent of Enron‘s
problems weren‘t market driven, but leadership related—a massive breakdown in accountability
and governance.‖
Rather than ―examin[ing] whether [a potential employee‘s] moral character matched the
company‘s so-called fidelity to integrity,‖ Enron recruits were often hired based on ―academic
credentials, innovative ideas and raw ambition.‖ This was the case with Andy Fastow, who
caught the attention of Jeffrey Skilling and was ―recruited [away] from Continental Illinois Bank
Bibliography 44
[because] he helped pioneer a system of raising capital by selling notes backed by risky loans.‖
Csorba records that the Enron Board of Directors, lead by Kenneth Lay, completely gave
away any integrity it had ―the day he and his board voted twice to lift the conflict of interest rules
for his CFO to play his games with off-balance sheet partnerships, both for the benefit of his, and
his employer‘s, crooked gain.‖
During the trial, other ―former Enron executives…also acknowledged they fudged
numbers, plundered reserves to boost earnings and dished out bogus information.‖
He offers several suggestions to other organizations in their hiring practices by saying
that ―Enron‘s hiring managers‖ should have ―evaluat[ed] character‖ by ―examining how recruits
manage privilege; their ambition; whether they mentor others; whether they are mission-minded
to serve something larger than themselves; and whether they view business as simply an amoral
exercise.‖
Mr. Csorba closes the article by saying, ―perhaps Lay and Skilling wish now that they
would have listened more to their critics, and a lot less to their CFO and themselves.‖
Critique of Article No 13
Blohowiak, D. (2004, November 10). Enron: Aftermath Teaches Yet Another Leadership Lesson
[Electronic version]. Lead Well Institute. Retrieved October 22, 2008, from
http://leadwell.com/db/1/4/274
The article briefly states that Enron went from being a large organization with many
employees and a large economic presence in Houston, Texas, but ended up leaving many
employees ―unemployed or financially devastated.‖ Those who were chiefly accused were the
former Chairman, the former Chief Executive Officer, and the former Chief Accounting
Bibliography 45
Officer—Kenneth Lay, Jeffrey Skilling, and Richard Causey, respectively.
The article does not state the history of the organization, nor the actions which caused
Enron to crumble. It simply presupposes everyone knows the story. Then, the article uses this
presupposition to discuss the difficulty which arises in critically yet impartially judging
someone.
Mr. Blohowiak says that:
Prejudice—positive and negative—enter the equation whenever any of us is
called upon to render an assessment of, or make a judgment about, the actions of
another person….especially…someone with whom we have a relationship or
about whom we have an opinion [and that]….The difference between seeing a
situation…as objective or subjective, is often your personal feelings….[which] is
near impossible to set aside.
The converse can also challenge us: when we coldly make a decision that
will affect others with little or no regard for the human impact of our ‗business
decision.‘
Using himself as an example, he admits that, as a manager of an organization or when
instructing college students, ―I‘d excuse a subpar performance from someone I generally liked
and respected; or I‘d come down inordinately harshly on the work of someone I didn‘t
particularly care for.‖
He says this is ―Being human,‖ but also says that, ―As a leader, your credibility depends
on treating everyone fairly.‖ He calls for leaders to be ―discipline[d]‖ and ―conscientious,‖ and to
balance their ―emotions‖ with ―objective data‖ and critical thinking.
Bibliography 46
Critique of Article No 14
Reh, F. J. (n.d.). Lessons Learned From Enron: Say ―No‖ to Yes-Men. Retrieved October 22,
2008, from http://management.about.com/cs/generalmanagement/a/Enron091902.htm
Everybody likes to be in a comfort zone—even leaders. But leaders cannot live there.
Leaders cannot surround themselves with people who think just like they do, and who don‘t
question their thinking, their ethics, their decision making, their communications, and their
actions. Leaders must avoid groupthink. Leaders must develop and nurture a culture where their
closest advisers may speak freely and question their leader. Leaders must support themselves
with a team that is unafraid to call their integrity into question. It may be an unpleasant
experience for both parties, but it keeps an ethical leader ethical and protects the organization;
leaders are paid for this discomfort and scrutiny. This same culture should be extended
throughout the organization—where any employee can share their ideas of transforming the
organization, and where they can question the organization‘s motives, policies, and actions.
Mr. Reh states that:
There are many lessons that can be learned from the collapse of Enron. Any
organization has an obligation to all of its stakeholders, not just its shareholders,
and those obligations were not met in this case. Executives at Enron made
decisions that were wrong. Some of their decisions may have involved illegal
activities. Many people also are beginning to question the professional conduct of
auditors Arthur Andersen. Did their interest in preserving their income cloud their
judgment?
It seems Arthur Andersen was guilty of a very prevalent ethical debacle—conflict of
Bibliography 47
interest.
Leaders are responsible for creating the vision for an organization—or perpetuating one
already in place and guiding it, as is the case when a new leader is brought in. At times, leaders
will need to realign the organization with that vision. At other times, leaders will need to shape
that vision here and there to help an organization where its vision has failed, wasn‘t focused, or
was too small. It is the responsibility of the leader to communicate that vision throughout all
levels of the organization—enlisting the support of vice-presidents and division managers to take
that vision and apply it to their functional areas; calling on managers to take ownership of the
vision and empower their staffs to do the same; and taking full advantage of the communication
staff to spread the vision throughout organizational communications, making sure that vision is
incorporated into the culture which the leader creates and fosters for the development and growth
of the organization and the people associated with it.
Mr. Reh continues:
When your company culture allows people to challenge ideas, suggestions, and
plans, you create an organization of thinking, committed people capable of
producing the kind of innovation and productivity required to succeed today.
However, if your company culture does not [allow] dissent, if people who suggest
alternatives are castigated for not being "team players", you produce an
environment of fear, stagnation, and antipathy. Not allowing appropriate dissent
will kill your company.
Every person throughout the organization is responsible to someone else—for this reason
alone, a strong sense of and commitment to ethics would be vital. Although organizations have
Bibliography 48
varying depths to their organizational structure—varying levels of hierarchy—line-level
employees report to their supervisors or managers, who in turn may report to a higher manager
or regional or divisional manager, who may then report to a vice-president. The vice-president
will have to answer to the president and/or CEO; and the president and/or CEO answers to the
Board of Directors which, if the system works, answers to the shareholders (stockholders). Each
level calls for people to act as leaders, whether they are assigned the role by the organization or
have the role unofficially attributed to them through the willing consent of others.
Further, Mr. Reh discusses our responsibility to our leaders and our organizations to give
them our honest opinions:
It is our responsibility to our bosses to be honest with them, to tell them what we
really think, even if we disagree. Especially if we disagree. You, and every one of
your peers, need to discuss issues openly, frankly, and with the best interests of
your area clearly visible. You need to give the boss as much information and as
many options as possible. Don't be afraid to fight hard for what you believe to be
right. Be professional about it, but be candid too.
―However, once the boss has made a decision, the discussion and arguing and dissent
must stop. [At that point,] you have an obligation to support your boss in that decision. You
expect it of your people; you should do no less‖ (Reh, n.d.). This is a part of ethics that concerns
hypocrisy—one cannot expect their own employees to listen to them without any questions
asked, and yet still expect to be able to freely question their own leaders.
―Challenging the status quo has to be a top priority in any organization. Accepting the
status quo leads to stagnation. Stagnation will kill any organization….Being a yes-man is
Bibliography 49
damaging to the individual, not just the company‖ (Reh, n.d.).
A final thought from Reh is the necessity for leaders to surround themselves with people
who provide diversity to balance out the similarity. Reh says:
Avoid the temptation to surround yourself with individuals who are so similar to
you that they can't offer a different perspective. Don't surround yourself with
people who are so afraid that they won't dissent. Reward creativity and original
thought in your decision-making process. Hang on to those people who have
mastered the art of disagreeing without being disagreeable.
Critique of Article No 15
The Associated Press. (2008, October 23). Greenspan admits ‗mistake‘ that helped crisis
[Electronic version]. Retrieved October 23, 2008, from
http://www.msnbc.msn.com/id/27335454/print/1/displaymode/1098/
Alan Greenspan, the former Federal Reserve Chairman who left his post in February of
2006 after serving for 18 ½ years, testified before the House Oversight Committee on the current
financial crisis. During his testimony, he admitted to what the article called ―flaws in his thinking
and in the workings of the free-market system.‖
Basically, Mr. Greenspan had believed that those who served as leaders in the banking
and mortgage industry would, through deregulation, act in the best interest of their stockholders
and organizations—protecting their investments and equity—by not choosing to fill the market
with subprime mortgage loans and securities backed by them. He now calls the ―mistake‖ a
―flaw in the model that I perceived is the critical functioning structure that defines how the world
works.‖
Bibliography 50
Mr. Greenspan did own up to making mistakes in his thinking and actions, including that,
because there had never been such a ―collapse‖ in home prices on a nationwide-level before, that
he did not believe it was possible. The article also quotes Mr. Greenspan as saying the housing
and economic crises have ―turned out to be much broader than anything that I could have
imagined.‖
In the article is written that Henry Waxman, the Chairman of the House Oversight
Committee, attributed the crisis to actions on the part of the Federal Reserve, the Securities and
Exchange Commission, and the Treasury Department. It also states that others pointed their
criticisms toward Mr. Greenspan. The article quotes Mr. Waxman as saying, ―Our regulators
became enablers rather than enforcers. Their trust in the wisdom of the markets was infinite. The
mantra became that government regulation is wrong. The market is infallible.‖ To which Mr.
Greenspan responded by blaming investors eager to purchase those subprime mortgage-backed
securities mentioned above, and saying that those investors ―did not worry that the boom in
home prices might come to a crashing halt.‖
Mr. Greenspan went on to say, ―Given the financial damage to date, I cannot see how we
can avoid a significant rise in layoffs…unemployment…threats to retirement funds and
increased job security.‖
The article does not say whether Mr. Greenspan should have accepted more blame for the
crisis, nor whether banking and mortgage leaders should come forward to admit their mistakes as
well.
Critique of Article No 16
Avolio, B. J., Weichun, Z., & May, D. (2004, June 22). The impact of ethical leadership
Bibliography 51
behavior on employee outcomes: the roles of psychological… [Electronic version].
Journal of Leadership and Organizational Studies. University of Nebraska-Lincoln,
Gallup Leadership Institute. Retrieved October 22, 2008, from
http://www.allbusiness.com/human-resources/employee-development/290762-1.html
This paper explores how ethical leadership psychologically impacts employees and sets
the condition in which they make decisions and take actions—such as being honest and
demonstrating loyalty. The basic argument is that when employees feel and believe themselves
to be empowered by their organizations, through their leaders—and this empowerment is
actually demonstrated through leadership action, and the employee takes reciprocal action—then
the employee develops a trust in the leaders and a commitment to the organization. ―The
consistency between [a] leader‘s true ethical intention and [their] behavior‖ is the leader‘s
―authenticity.‖
The authors use the 2001 work of Aronson to state that, ―Leaders are obligated to set a
moral example for organizational members and to determine those organizational activities
which may be detrimental to the values of society in general‖ (cited in text).
Avolio, Weichun, and May (2004) further say that:
[When] [l]eaders exhibit ethical behaviors...they help to elevate followers' moral
awareness and moral self-actualization. [Therefore], ethical leadership
encompasses more than the fostering of ethical behaviors….[and] create the right
conditions and organizational culture…to foster the development of ethical
behavior.
The authors look to China, and Confucius, to see that, ―gentlemen can convince the world
Bibliography 52
only with their noble ethics."
Critique of Article No 17
National Association of Corporate Directors. (2008, October). Key Agreed Principles to
Strengthen Corporate Governance for U.S. Publicly Traded Companies. Retrieved
October 22, 2008, from
http://www.directorship.com/stuff/contentmgr/files/2/7d77608e0e0a8a1fb1df2d3593f948
48fe/misc/heyagreedprinciples.pdf.
This document includes the Principles, an Introduction, and letters by Kenneth Daly, the
President and CEO of the National Association of Corporate Directors (NACD), and John
Castellani, the President of The Business Roundtable.
Per Kenneth Daly:
The current economic crisis has eroded public and investor confidence in
corporate governance. American corporations must take action to restore the
public trust. For the past year, we have worked with business leaders and
shareholder groups to create the attached set of Principles to serve as a framework
for strengthening governance for U.S. publicly traded companies….[and to]
empower board leadership, particularly in the areas of oversight of risk, corporate
strategy, compensation, and transparency.
Part of the Board Responsibility for Governance includes ―setting the tone‖ of ethics,
integrity, and transparency of the organization and all ―financial disclosures and controls,‖ and
acting as a watchdog to ensure the organization obeys all laws and government regulations.
According to the Principles, the role of the director of the board requires ―integrity, objectivity,
Bibliography 53
judgment, diplomacy, and courage.‖
The NACD recognizes that the existing corporate climate include pressures to please, and
―scrutiny‖ by, all stakeholders—each with their own ―interests in its operation and success‖—
and the need to try and balance these diverse and ―competing [interests] and pressures‖ while
still trying to position the organization for long-term success while also being aware of the short-
term values that are often the key focus of stakeholders and financial analysts.
While the President and other management leaders are accountable to the Board of
Directors, the principle of Independent Board Leadership provides ethical safeguards which help
prevent conflicts of interest from arising between the President and CEO and the Board. The
NACD recommends, through this principle, that board leadership be evaluated annually to
ensure independence.
For the NACD, the principle of Integrity, Ethics, and Social Responsibility is key to the
creation and maintenance of organizational culture and the cornerstone of building sustainable
relationships with stakeholders. According to the principle:
The board plays a key role in assuring that an appropriate corporate culture is
developed, by communicating to senior management the seriousness with which
the board views the matter, defining the parameters of the desired culture,
reviewing efforts of management to inculcate the agreed culture (including…[a]
review of compliance and ethics programs) and continually assessing the integrity
and ethics of senior management.
Further, integrity, ethics, and social responsibility are:
…at the heart of effective governance, and should factor into all board
Bibliography 54
decisions…particular[ly]…when considering management proposals; assessing
internal controls and procedures; reviewing financial reporting and accounting
decisions; and…when discussing management development and succession
planning. [Also, the] board should pay special attention to how members of senior
management approach their own conflicts of interest.
The principle of Shareholder Communications stresses developing a strong relationship
between the board and the shareholders and always keeping the lines of communication between
the two open and flowing. While traditional communications will still be relied upon, such as the
―proxy statement, annual report, annual meeting, and other meetings and
correspondence....Boards should also consider…developing stronger relationships with investors
through candid and open dialogue…about corporate governance issues and long-term strategy
issues.‖
Critique of Article No 18
Galuszka, P. (2008, October 22). NACD Offers Guidelines to Bolster Public Confidence. BNET
(Business Network). Retrieved October 22, 2008, from
http://blogs.bnet.com/ceo/?p=1439.
Mr. Galuszka gives a brief synopsis of the ten Key Agreed Principles to Strengthen
Corporate Governance for U.S. Publicly Traded Companies, established in October of 2008.
These principles were formed in recognition of a breakdown in organizational ethics and as a
response to the waning public trust of organizations and their Boards of Directors, particularly
during this current economic collapse. Mr. Galuszka says that, while the principles raise the
standards for corporate governance, there is still a longs ways to go in many areas, including
Bibliography 55
―backing many aspects of corporate democracy, such as direct shareholder nominations of
director candidates.‖
Mr. Galuszka‘s synopsis of the principles are that Boards of Directors must be
responsible for designing and ensuring ―competent‖ and ―transparent‖ ―[self-]governance,‖ ―free
of management control,‖ ―free to set their own agenda,‖ and able to adapt and grow and the
organization changes. The culture of the organization should have as its foundation ―integrity,
ethics and responsibility.‖ The Boards must ―pay attention to‖ and be ―accountable to
shareholders,‖ being ―objective in their outlook,‖ and carefully consider[ing] non-binding
resolutions proposed by them.‖ ―Shareholders should be allowed to elect directors by a majority
vote [and if] a director does not get a majority vote in an uncontested election, [then] he or she
should resign.‖ There should also be open and effective communication between shareholders
and the Board.
Critique of Article No 19
International Business Ethics Institute. (n.d.). Business Ethics: A Corporate Advantage.
Retrieved October 22, 2008, from http://www.business-ethics.org/corpadv.html
Strong ethics offer an organization several advantages.
Within the marketplace, customers and investors often decide who to do business with or
invest in based on the ethics of the organizations they are considering.
Strong organizational values and ethics that are embedded within the culture and are
actively practiced, not just given lip-service to, are linked to ―improved employee morale,
reduced employee turnover and increased productivity.‖
The International Business Ethics Institute (IBEI) says that:
Bibliography 56
Once damaged by scandal or unethical behavior, a company‘s reputation may
never recover - resulting in lost revenue, low employee morale and increased
governmental and public scrutiny. Emphasizing responsible business conduct is
the surest means of preserving a company‘s intangible assets.
Many governments throughout the world ―provide strong legal and financial incentives to
corporations that establish standards of conduct and provide ethics education and training to
employees.‖ This is another example where honesty does, indeed, pay dividends.
Critique of Article No 20
Pinchot, E. (2008). Can We Afford Ethics? Retrieved October 22, 2008, from
http://www.pinchot.com/MainPages/BooksArticles/OtherArticles/
CanWeAffordEthics.html
―[E]thics is [not] a luxury—it‘s a staple in the success on any enterprise‖ (Pinchot, 2008).
The old bureaucratic way of managing an organization is with top-down control,
centralized planning, and multiple levels of management. Leaders ―feel coerced to manage things
for the short term bottom line.‖
Ms. Pinchot says:
To flourish in the modern marketplace, we need extraordinary commitment from
all employees, often to do the impossible: to achieve unprecedented quality and
responsiveness in products and services along with heroic frugality, to create
incredible levels of integration and collaboration within and without the
organizations, and especially to pull off continuous, brilliant, and cheap
innovation‖ (2008).
Bibliography 57
According to Ms. Pinchot, ―We must build organizational cultures in which
freedom and personal initiative can cohabit with cooperation, caring and a highly integrated
harmony.‖
Today, organizational leaders consider many new factors as a part of ethics—including
―quality of work life and minimizing environmental degradation.‖
Ms. Pinchot (2008) says, ―Effective societies and effective companies alike have their
grounding in ethical basics that rest on freedom and democracy: the value of [individual
personal] diversity; distributed power [the empowering of employees to make ethical decisions
which affect planning, performance, and profits]; continuous reality testing [through ‖what Max
De Pree calls ‗lavish communications,‘ which only occur in organizational cultures that promote
truth and never suppress or limit the distribution of information‖]; distributed leadership; global
ethics; acting for the long run [versus short-term gain]; and the Golden Rule.‖
Ms. Pinchot (2008) continues:
In these circumstances of increasingly empowered and self-organized
employees, simple rules and rigid policies are not enough to guide employees.
There must be a shared sense of where the organization is trying to go, and then,
because ends never justify means, a deep respect for ethics. The power of
leadership is in providing ethical and effective power to the people.
Leadership…must be as distributed as intelligence—free people cannot
collaborate without sharing the big picture, cannot move forward effectively
without a common mission, cannot self-test and self-renew without accurate
feedback, cannot count on each other without trust in a common and widespread
Bibliography 58
moral wisdom.
[W]e must develop in ourselves both the analytic and the heartfelt, the
canny trader and the caring compatriot…the competitor and the partner.
Freedom extended to people embedded in a deep sense of community is the basic
lesson the Japanese are teaching the world….[and] we must learn to be ethical not
only to the level of company and beyond to the level of our national communities,
but to extend our ethical boundaries to include the world
‘Do unto others as you would have others do unto you‘ is the basic rule for
community survival. Those groups which survive well will treat each other and
even their customers as equals, with consideration and respect. Internally, the
‗Golden Rule‘ is needed to prevent our worst – destructive-in-fighting, stifling
authoritarianism, diverting status-seeking. This principle is the basis of pulling
together and getting done anything of value…..We function best when we can
count on others, and others on us, and when we are willing to collaborate with our
colleagues and customers on mutual goals. Every workplace that has long-term
success rests on community values: mutual support, caring for each other, our
customers, and the worlds we share, and being responsible to learn and change so
as to produce unquestionable positive value--or jeopardize everyone's survival.
In the future, ethics will play an even greater role in business, and those organizations
that are the most ethical, that are driven by time-tested values that are generally accepted as
universal, and that make ethics a foundational aspect of their culture, will be recognized by
consumers with their purchases and employees and investors with their loyalty.
Bibliography 59
Critique of Article No 21
Ethics Resource Center. (2008, June 12). Performance Reviews Often Skip Ethics, HR
Professionals Say. Retrieved October 22, 2008, from http://ethics.org/about-erc/press-
releases.asp?aid=1150
According to an article published by the Ethics Resource Center (ERC), ―In a new
national survey, only 43 percent of human resources professionals said their organizations
include ethical conduct as part of employees' performance appraisals‖ (2008).
The study, The Ethics Landscape in American Business, is the third such study jointly
conducted by the ERC and the Society for Human Resource Management (SHRM) since 1997.
The study looks at the attitudes towards ethics of human resource professionals and the
organizations where they work.
According to the ERC (2008), the findings show that ―human resource professionals…are
their organizations' primary resource for ethics-related issues, and…help create ethics policies.
But most don't feel…truly part of the ethics infrastructure. Instead, they are just asked to ‗clean
up‘ the situations caused by ethics violations.‖
Susan Meisinger, president and CEO of SHRM, said, ―Human resource professionals are
integral to the process of creating and maintaining ethical organizations—from helping to write
ethics and compliance programs and procedures, to disciplining ethical breaches....Organizations
can benefit by bringing HR professionals into the early conversations when planning ethics-
related programs" (Ethics Research Council, 2008).
Using the Federal Sentencing Guidelines for Organizations (FSGO) as a benchmark,
which outlines six fundamentals of ―a comprehensive ethics and compliance program,‖ the ERC
Bibliography 60
was able to use the study to determine that, of the human resource professionals surveyed, 7
percent work for an organization that does not have any kind of ethics program whatsoever, and
only 23 percent have a ―comprehensive ethics and compliance program in place.‖ The ERC
found consolation in that ―82 percent of HR professionals said they reported ethical misconduct
when it was observed, compared with 61 percent of employees.‖ The reasons for HR
professionals not reporting ethics violations were that they either felt they could not do so
anonymously or felt that those who committed the ethics violations would go unpunished.
The six fundamentals of a comprehensive ethics and compliance program are: ―written
standards of ethical workplace conduct;‖ ―means for an employee to anonymously report
violations of ethics standards;‖ ―orientation or training on ethical workplace conduct;‖ ―a
specific office, telephone line, e-mail address or Web site where employees can get advice about
ethics-related issues;‖ ―evaluation of ethical conduct as part of regular performance appraisals;‖
and ―discipline for employees who commit ethics violations.‖
The article listed three ―key findings‖ of the survey:
Ethical misconduct most commonly identified by HR professionals
included abusive or intimidating behavior toward fellow employees, plus abuse of
e-mail or Internet privileges. Employees (U.S. average) cited instances of
colleagues calling in ‗sick‘ inappropriately, and people taking credit for someone
else's work.
HR professionals think that top management (77 percent) would be less
likely to be held accountable if caught violating their organization's ethics
standards than supervisors (86 percent) and non-management employees (91
Bibliography 61
percent).
A small proportion of HR professionals (19 percent) and employees (U.S.
average: 11 percent) reported feeling pressure by others (within their organization
or externally) to compromise their organization's ethics standards, company
policy, or the law (Ethics Research Council, 2008).
The HR staffs of many organizations seem to be underutilized by leadership. A
professional HR staff should be able to help the leaders of an organization not just establish and
implement ethics policies, but also help in creating vision and culture and facilitate the
embracing of both by all stakeholders.
Critique of Article No 22
Ethics Resource Center. (2008). Ethics Resource Center Calls on McCain and Obama to Make
Ethics High Priority if Elected. Retrieved October 22, 2008, from http://www.ethics.org/
―Poll Shows Americans Overwhelmingly Support Strong Ethical Leadership in
Washington‖ (Ethics Resource Center, 2008, ―ERC Calls on McCain‖). Americans are
disillusioned with many of today‘s organizational leaders—political, governmental, and
religious. As a result, Americans want to see reform in leadership and increased ethical
responsibility.
The federal government is the largest organization in the United States of America. It is
probably also the most visible and, in addition to media and religious organizations, has the most
influence and direct control over people‘s lives. The federal government is filled with
organizations whose leaders are not proficient at effective communication, and whose leaders
and followers, alike, frequently make unethical decisions and engage in unethical practices.
Bibliography 62
According to their Web site, ―The Ethics Resource Center (ERC) is the nation‘s oldest
nonprofit research organization devoted to ethics in the workplace.‖ Prior to the 2008
presidential election, the ERC asked both McCain and Obama to make ethics a priority concern
for the soon-to-be newly-elected administration. In particular, the ERC asked for the new
administration to ―raise ethical standards for federal [employees].‖
―A national poll conducted by the ERC from 19-22 September found that 88 percent of
those polled—regardless of demographics—thought that a strong ethics plan was important for
the new administration.‖ [Not quite verbatim, but close, so I have put it in quotes.]
Patricia Harned, President of ERC, said that, ―It seems the American people at the
moment don't think 'Washington' and 'ethics' belong together in the same sentence….It is critical
that the next President, whoever it is, seize the opportunity to start re-building the public's faith
in their government institutions.‖
In 2007, the ERC conducted the National Government Ethics Survey and found that
federal employees made a much greater number of unethical decisions than the public even
realizes. The survey showed that most of these unethical decisions can be traced back to the
environments where the employees work. Environments are the product of the culture and values
of the leaders and the organization. It is up to the leader to embody the culture and values and to
bring the organization together in living them. It is up to the leader to ensure that organizational
policies create an environment conducive to ethical decision making. While the kinds of
pressures which may permit an individual to make an unethical decision cannot be altogether
eliminated, the leader can continually stress to the organization the importance of ethical values,
and can create a culture where unethical decisions and actions are not only punished, but where
Bibliography 63
employees know they are free to anonymously report ethics violations without fear of reprisal.
Harned wrote in her letters to McCain and Obama that:
Conflicts of interest, abusive or intimidating behavior, and lying to employees are
particularly common, and fraud is as likely to occur in government as in the
private sector. ‗This is borne out, unfortunately, by some of the recent disclosures
about misconduct in the federal government. For example, the reported actions of
Interior Department workers engaging in sex, drugs, meals, ski trips, and sports
tickets from members of the oil industry they were supposed to be monitoring
(ERC, 2008, ―ERC Calls on McCain‖).
Harned goes on to write:
Our research has shown that building and reinforcing an ethical workplace
requires an organization's top leaders to focus on two complimentary initiatives.
First is the installation of a rigorous ethics and compliance program that
communicates and upholds a broad set of ethical principles. That must be
followed by a continuing dedication to building and maintaining an ethical culture
(ERC, 2008, ―ERC Calls on McCain‖).
Critique of Article No 23
Sankar, Y. (2003, March 22). Character Not Charisma is the Critical Measure of Leadership
Excellence. [Electronic version]. Journal of Leadership and Organizational Studies.
Baker College, Center for Graduate Studies. Retrieved October 22, 2008, from
http://www.allbusiness.com/print/595063-1-22eeq.html
This paper, like many others, states that there is an ethical crisis in leadership, stemming
Bibliography 64
from a lack of character on the part of many leaders, and focuses on this crisis and its link to two
thoughts on leadership—charismatic leadership, and character-based (or ethical) leadership.
As stated in the paper, ―The character of the leader is grounded on such core values as
integrity, trust, truth, and human dignity, which influence the leader‘s vision, ethics and
behavior.‖ Not only may the leader have a very strong moral ethic—or strong character—but he
or she may be considered ―charismatic,‖ as well. While the nature of the term ―charisma‖ has
been diluted over the centuries from its original meaning as a person who has been ―gifted‖ with
special qualities from the Holy Spirit, or a ―higher power,‖ to what is today thought of more as
being ―inspirational‖ or able to inspire others to meet organizational goals or to believe in
themselves or their common cause, charisma is not what sustains an organization as it faces
ethical decisions. ―Charisma is not connected to ethics, moral literacy, mentoring or the design of
an ethical culture for the organization by the leader. It is the character of the leader that is
connected to these elements of a leader's behaviour.‖ Charisma can be found in leaders with both
good and bad moral characters, and people follow them both. Both the leader, and the culture of
the organization he or she leads, should be sustained and guided more by character than by
charisma. It is the character of a leader which makes one choose to be a servant or a mentor.
―Character acts as a moral compass for guiding others along the ethical path.‖
The author next states that a ―value-based‖ leader ―has to be 95 percent psychologist‖ in
order to understand those he or she is trying to lead. By understanding the people, the leader
understands their values and what motivates them. The leader is able to form relationships with
them and inspire trust. The psychological aspect helps the leader to know if his or her people are
―truly following.‖
Bibliography 65
The author explains that, historically, the study of leadership began with the desire, or
very real need, of finding a ―guardian.‖ People needed protection and they were looking for a
new leader that had the ―guardian‖ qualities of the last leader. Over the millennia, the quest for
and study of leadership became ―demythologized, secularized, empiricized, democratized, and
psychologized, and now…notions of values, ethics, and morality have been leached away,
ignored, or depreciated as irrelevant.‖
As the author says, it doesn‘t take a good value system to be able to issue a command or
an order, but it does take a good value system for someone to make the ‗right‘ ethical decisions
to sustainably lead an organization. The overall value system for an organization is created by
the leader(s), incorporated and sustained by the culture, and transmitted to the followers through
relationships built through good communications.
As Sankar (2003) states:
Organizational values are developed and reinforced primarily through value based
leadership, a relationship between a leader and followers that is based on shared,
strongly internalized values that are advocated and acted upon by the leader.
Leaders influence cultural and ethical values by clearly articulating a vision for
organizational values that employees can believe in, communicating the vision
throughout the organization, and institutionalizing the vision through everyday
behaviour, rituals, ceremonies, and symbols, as well as through organizational
systems and policies.
Charisma focuses on personality attributes such as dynamism, style,
image, inspiration, symbolic behaviours (House, 1977) impression management,
Bibliography 66
emotional intelligence (Coleman, 1998), extroverted style, self-confidence,
empathetic understanding, and admiration for articulating a vision (Shamir, 1995).
CEO charisma represents a potentially key component of strategic leadership
(Bass, 1990; Hunt, 1991). However, an alternative conceptualization is that
charismatic leadership may occasionally be more personalized in nature where the
leader is self serving, self-aggrandizing, and exploitative of others (Kets de Vries,
1993; Klein and House, 1998) displaying high levels of Machiavellianism (i.e.
maximizing one's self interest at the expense of others through the use of
manipulation and deceit) narcissism and authoritarianism causing loss of self
initiative and self control of their followers.
Leaders whose personalities are characterized by a high degree of
narcissism are driven by intense needs for power and prestige. The use of coercive
power, intimidation, and deception are some of the strategies used to enhance the
power visibility of these charismatic lenders (Sankar, 2003).
As Mr. Sankar also states in his paper:
Conger et al (1989) observe ‗charisma‘ is a Greek word meaning ‗gift of grace.‘
Its earliest use can be traced to the Bible, in which St. Paul employs the term in
two letters (Romans 12 and I Corinthians 12). He enumerates such things as
wisdom, knowledge, prophecy, healing, and the ability to understand and express
oneself in different languages as gifts (charisma) endowed by the Holy Spirit on
particular people.
Mr. Sankar then goes on to trace the evolution of the term. He quotes Max Weber from In
Bibliography 67
the Theory of Social and Economic Organization, published in 1947: ―[The charismatic leader] is
set apart from ordinary men and treated as endowed with supernatural, superhuman, or at least
specifically exceptional powers or qualities.‖
Next, Mr. Sankar summarizes the works of others, such as House and his colleagues who,
in 1991:
…attribute[d] three characteristics to charismatic leadership: (1) extremely high
levels of self-confidence, (2) dominance, and (3) a strong conviction in the moral
righteousness of their beliefs. House, Spangler, and Woycke (1991) define
charisma as ‗the ability [of] a leader to exercise diffuse and intense influence over
the beliefs, values, behavior, and performance of others through his or her own
behaviour, beliefs, and personal example.‘ They see charisma as a ‗relationship or
bond between a leader and subordinates‘—an attribution assigned by the
followers coupled with personality trait[s] intrinsic to the leader. Moreover, a
follower's belief in the charismatic's divine link is watered down to ‗inspirational
powers‘ [that have]… no divine connotations. Inspiration [is simply] defined as
the extent to which a leader stimulate[s] enthusiasm among subordinates for the
work of the group and says things to build their confidence in their ability to
successfully perform assignments and attain group objectives.
Sankar relates that many are finding that the term ―charisma‖ does not fit well into
organizations today because the historical meaning requires belief in a supernatural force, which
many people do not accept. Sankar then follows on to say that the ―emergence‖ of such
―charismatic‖ leaders today would require ―a major crisis at the societal level….a life-and-death
Bibliography 68
situation to ignite dormant charisma, if there is room for such a thing in today‘s modern skeptical
mind.‖ This paper was published in 2003; almost 18 months after September 11. That was such a
time where charismatic…albeit highly ethical…leaders were needed. This is true even more
today as the world economy is collapsing. These are the major crises at the societal level that
should inspire such leaders.
Sankar also explains that it is the follower‘s belief in the ―transcendent mission of the
leader and their belief in the divine source of this transcendence‖ that produces the ―motivational
power‖ of charisma.
To serve as a segue into The Dark Side of Charisma, the next major section of his paper,
Sankar emphasizes that:
When charisma is secularize[d]….[t]his puts a big question mark on the
motivational value of such watered-down charisma. Without a belief in a
transcendent mission and divine calling, charismatic leadership is not much more
than another leadership style or personality strait. Divorced of its divine
connotations, it becomes little more than charm or an aura. There is no difference
between it and the popular meaning people attach to it in [the] everyday use of the
term.
This segue is also a warning. When leaders who are ―charismatic‖ in the secular or
―popular‖ sense are able to rally masses to a cause they believe in, those leaders have the
exponential power to cause much destruction, suffering, and death—Hitler, Stalin, Pol Pot, Jim
Jones, David Koresh, and others. In creating a demarcation line between the characters of good
and bad charismatic leaders Sankar states, ―The dark side of charisma is essentially a crisis in
Bibliography 69
character or character flaws of the charismatic leader, which neutralize his/her core value of
integrity and his search for excellence.‖
Sankar refers to the work of Conger and Kanungo who, in 1998, published their ―theory
of charismatic leadership‖ which discussed, in part, the negative character traits of leaders who
are ―on the dark side.‖ Sankar agrees with Conger and Kanungo and believes that ―character…is
the major determinant of leadership excellence.‖
Sankar gives an excellent summary of many character flaws of charismatic leaders and
the impact it has on their followers as they lead. I have included this summary in its entirety:
Charismatic leaders can be prone to extreme narcissism that leads them to
promote highly self-serving and grandiose aims. As a result, the leader's behaviors
can become exaggerated, lose touch with reality, or become vehicles for pure
personal gain. In turn, they may harm the leader, followers, and the organization.
An overpowering sense of self-importance and strong need to be at the center of
attention can lead charismatic leaders to ignore the viewpoints of others and the
development of leadership ability in followers. We might even classify
charismatic leaders as positive or negative by their orientation toward satisfying
their own needs versus those of their followers. For example, negative charismatic
leaders presumably emphasize a devotion to themselves over their mission. They
also are likely to promote personal identification and dependence on themselves
over a more straightforward endorsement and internalization of the values and
ideological goals they are promoting. Positive charismatic leaders, on the other
hand, are more likely to emphasize the mission rather than themselves and to seek
Bibliography 70
internalization over personal identification.
Sankar then contrasts this ―dark side‖ of charismatic character with traits which are
positive, and uses the 1991 work of House and his colleagues to do so. They proposed that
―positive and negative‖ charismatic leadership could be classified as both ―socialized‖ charisma
and ―personalized‖ charisma. In summarizing House and his colleagues, Sankar says:
Their theory holds that although the socialized charismatic leader has a high need
for power, it is counterbalanced with high activity inhibition, low
authoritarianism, an internal locus of control, high self-esteem, and low
Machiavellianism. These ‗balancing‘ characteristics shape the socialized leader's
behavior such that it emphasizes the collective interests of followers. The leader's
tendency is to govern others through more egalitarian means, to work through
established channels of authority, to address followers' needs, and to approach
motivation through empowerment. In contrast, the personalized leader has a high
need for power that is instead coupled with low activity inhibition, high
authoritarianism, an external locus of control, low self-esteem, high narcissism,
and high Machiavellianism.
These characteristics promote leadership behavior that is largely self-
serving. Such leaders govern in a totalitarian manner, discourage questioning of
their decisions, advocate goals that largely benefit themselves, disregard
legitimate institutional channels, and use punishments and rewards to motivate.
Among their followers, they prefer to foster dependence and unquestioning
obedience over independent thinking.
Bibliography 71
Sankar asks, ―How can we judge the two charismatic leadership forms to be ethical or
unethical?‖ He then goes on to say that we must first define what it means to be ethical. His
definition is ―that which is morally good, or that which is considered morally right--as opposed
to that which is legally or procedurally right.‖ He paraphrases Saint Thomas Aquinas in saying,
―the moral goodness of behaviors should be judged on the basis of the objective act itself, the
subjective motive of the actor, and the context in which the act is performed.‖ Sankar goes on to
correlate this with a leader of an organization, and expresses the characteristic approaches he
feels the ethical leader would be focused on:
The ethical nature of charismatic leadership in organizational contexts manifests
itself on three dimensions: the leader's motives; the leader's influence strategies;
and the leader's character formation. Charismatic leaders exhibit ethical leadership
when they (1) strive to operate with an altruistic intent, (2) utilize empowering
rather than controlling strategies to influence followers, and (3) endeavor to
cultivate virtues and abstain from vices to build their own character. A virtuous
character is the building block of leadership excellence.
Sankar continues on throughout his paper to explore these subjects. He talks about the
character of a leader—with ―core values‖ and ―sub values‖—and how these values relate to
integrity. He discusses how a good leader uses his or her ethics to ―govern‖ how they lead their
lives and how they lead others. His uses these subjects to establish his views on the relationship
between character and mentoring others. As Sankar states:
The leader can be a mentor or role model because of his/her character not his
charisma. Mentoring is a value-based concept. The leader's credibility as a mentor
Bibliography 72
is enhanced by her core values, ethical vision, moral commitment and her
conception of her duty to organizational members. For example, trust is a core
value in mentoring. Trust comes from character, not charisma.
Sankar also discusses ―moral intelligence, insight and imagination‖ and establishing the
―ethical culture‖ of an organization, and how both are connected, again, to ―character not
charisma.‖
Regarding ―moral literacy‖ Sankar says:
[It] consists of the basics of ethics, ethical principles, rules of conduct,
conceptions of right and wrong, moral intelligence, imagination and moral
commitment to our moral heritage and ground rules for decision-making….It is
from moral literacy that a leader can articulate the core values that drive his or her
vision and the… essentials of an ethical culture of his or her organization. It is in
the decision making process, the essence of management, that a leader's moral
vision, values, and imagination are tested in volatile environment.
Towards ―ethical culture‖ Sankar says that leadership is paramount because ―integrity (or
the lack of it) flows from the top down.‖ He refers to surveys and statements both from the
organization Business Roundtable: ―‘To achieve results, the Chief Executive Officer and those
around the CEO need to be openly and strongly committed to ethical conduct, and give constant
leadership in tending and renewing the values of the organization.‘" Citing the results of the
companies surveyed, Sankar explains why ―the single most important factor in ethical decision-
making [is] the role of top management in providing commitment, leadership, and example for
ethical values.‖ Seeing the leader(s) as ultimately responsible for communications within an
Bibliography 73
organization, Sankar suggests communicating those values through the means which are
typically witnessed—―speeches, company publications, [and] policy statements.‖ Sankar notes,
though, that the most important way a leader can communicate ethics, values, and integrity
within the culture of the organization is by living them through his or her ―personal actions.‖
Sankar says that:
Top leaders are responsible for creating and sustaining a culture that emphasizes
the importance of ethical behaviour for all employees every day. When the CEO
engages in unethical practices or fails to take firm and decisive action in response
to the unethical practices of others, this attitude filters down through the
organization. Formal ethics codes and training programs are worthless if leaders
do not set and live up to high standards of ethical values based on their character.
Perhaps one of the most valuable and constructive portions of Sankar‘s paper is a
comparison and contrast given to show character traits and actions which compromise a leader‘s
integrity and what the antithesis of, or remedy for, each would be. The negative aspect is stated
and the remedy follows in parentheses:
Displays Arrogance by becoming puffed up with their own importance,
exaggerating their worth to the organization, and speaking only with people at
same or higher level. (Possess humility).
Promotes Self-interest by exploiting the organization for own purpose and
focusing on "what's in it for me" when considering actions. (Maintain concern for
the greater good).
Practices Deception by making untrue statements, taking credit for the
Bibliography 74
work of others, and using misleading facts to defend positions. (Be truthful).
Breaches Agreements by delivering services late, or failing to follow an
agreed upon decision process. (Fulfill commitments).
Deals Unfairly by making judgments without researching facts,
discriminating in hiring and promotion, and assigning the most interesting
projects to a favored few. (Strive for fairness).
Shifts Blame by declining to acknowledge personal responsibility, falsely
accusing others, and denigrating the reputation of colleagues. (Take
responsibility).
Diminishes Dignity by withholding recognition, declining to invite or
accept input, exhibiting discourteous and impolite behavior. (Have respect for the
individual).
Retains Envy by begrudging others success, and Competing at every
opportunity. (Celebrate the good fortune of others).
Neglects Employee Development by Providing superficial Performance
appraisals and failing to coach or train staff. (Develop others).
Avoids Risks by refusing to confront unjust actions, or declining to stand
up for principle. (Reproach unjust acts).
Holds Grudges by failing to let go of hard feelings, and finding ways to
get even. (Be forgiving).
Declines to Extend Self by withholding help and assistance in times that
matter, and being ungenerous in rewards. (Extend self for others).
Bibliography 75
Critique of Article No 24
Tahmincioglu, E. (2008, November 5). Should You Admit A Mistake. MSN Careers. Retrieved
November 13, 2008, from http://msn.careerbuilder.com/Article/MSN-1702-Workplace-
Issues-Should-You-Admit-a-Mistake/?sc_extcmp=JS_1702_msnbc&SiteId=
cbmsnbc41702&ArticleID=1702>1=23000&cbRecursionCnt=1&cbsid=9ac9a34baa0f
4bd4b34ee78827d2b7e6-279884155-VP-4
Quoting human resources (HR) and other business sources, Ms. Tahmincioglu looks at
whether it is always wise for one to admit their mistakes in the business world and what some
positives and negatives are of doing so—such as whether there ―could be a hidden cost to
admitting any error.‖
Carol Tavris, a social psychologist and one of the authors of Mistakes were Made (But
Not By Me): Why We Justify Foolish Beliefs, Bad Decisions, and Hurtful Acts, says that it is not
common anymore to see people in politics and the business world—particularly finance—take
responsibility for their mistakes. At least they don‘t seem to be doing so publicly.
Ms. Tahmincioglu points to the collapse of Wall Street and the economy and says that
admitting mistakes has been a rarity. She gives the example of Lehman Bros. CEO Richard Fuld,
who was at the helm during the collapse, and his testimony before Congress. During his
testimony, he defended both his decision making and his actions as ―prudent and appropriate,‖
saying that the collapse was a combination of short selling, government actions, and other
factors.
Angie Morgan, one of the authors of Leading From the Front: No-Excuse Leadership
Tactics for Women, asks how society feels about CEOs who don‘t accept responsibility and
Bibliography 76
admit their mistakes. She points to the fact that these leaders have lost their integrity. As Ms.
Morgan says, ―Respect is the ultimate reward you can get as a leader."
Ms. Tahmincioglu then states that the decision of whether or not to admit a mistake
depends of the seriousness or weight of the mistake, ones approach to correcting the mistake, and
how managers at the organization react to mistakes being made.
Ms. Tahmincioglu relates a mistake made by Ms. Morgan while she was stationed in
Australia as an officer in the Marine Corps, and what she learned about making mistakes from
the experience. Ms. Morgan had sent two Marines into the Outback without any radios and,
when they did not return that evening, immediately went to her commander to admit the mistake
and the risk of life she had put those Marines in.
Ms. Morgan relates that, after the Marines were recovered, her commander discussed
with her what she did and what she should have done to not put the two Marines in that situation.
While Ms. Morgan admits to learning that, ―When you acknowledge mistakes, you can start
looking for solutions,‖ she also observed the importance of effective and efficient
communications within an organization—especially during a potential crisis. As Ms. Morgan
recalled, her commander ―utilized his communication channels to get a sense of where they were
last seen, which allowed him to send out Humvees in those areas to try and locate them….His
actions were immediate."
Another instance Ms. Tahmincioglu writes about was when a copywriter had just
received a large number of direct-mails back from the printer. The mailers were supposed to
advertise to lawyers a $265.00 dollar reference book, but the price came back $26.50. The
employee went into her supervisor, Ms. Lin Grensing-Pophal, an expert in HR management, and
Bibliography 77
admitted to making the mistake. She also was prepared with two courses of action for correcting
the mistake, and offered to have the cost of fixing the mistake taken out of her salary.
The employee not only did not have to pay the costs associated with the mistake, but also
acted as an example to Ms. Grensing-Pophal, who now makes sure she also always used the
employees three point approach to admitting mistakes—do so immediately, take ―full
responsibility,‖ and offer solutions. Ms. Grensing-Pophal identifies that the mistake did not fall
squarely on the copywriting employee, even though she took full responsibility for it. Also
making a mistake in that situation was the project manager for the direct-mail and the
proofreader.
As Ms. Grensing-Pophal says, ―Mistakes, in my opinion, are not opportunities to chastise
or place blame, they're opportunities to learn and improve."
Ms. Tahmincioglu quotes author Tavris who says that children are supposed to learn how
and why to admit mistakes as they grow up, but often witness parents and other adults reacting
like ―making mistakes means you are stupid or incompetent,‖ rather than the healthier belief and
approach of those who do admit to mistakes—that ―those mistakes [are not] a reflection on their
own character and ability.‖
According to Paul Facella, the CEO of Inside Management, a consulting firm, and the
author of Everything I Know About Business I Learned at McDonald's, ―The ability to admit a
mistake may also depend on your own conscience.‖ Facella tells how, at McDonald‘s and at
many other organizations with a similar culture, employees are made to feel ―comfortable‖
admitting their mistakes, and that, "In most situations, if people are honest and explain what they
did, and it had no true malicious intent, then most organizations will acquiesce and like that."
Bibliography 78
Facella says that one should weigh the consequences of admitting to a mistake and,
unless the person truly feels they should not do so, then it is best for them to determine when and
where to admit to, and explain, the mistake to ones managers. Author of The Integrity Dividend,
Tony Simons agrees and says that within large organizations, a mistake is usually made by a
collective group of people and, as such, so they should admit to the mistake together.
Ms. Tahmincioglu finishes the article talking about the possible legal implications of
admitting to a mistake. Tony Simons says such implications include ―loss of bonuses or even jail
time,‖ but fails to mention other financial repercussions that result from a lawsuit.
Ms. Tavris, though, believes too much fear has been built up of people being fired or
otherwise ruining their career by admitting to large mistakes. Mr. Simons adds that it may even
help one‘s career to admit mistakes because it shows responsibility and that one can be trusted;
and people like that. However, he also adds that people should understand that admitting to a
mistake may also bring severe consequences as well, and so people should ―be able to read if
those around [them], and the company [they] work for, are worthy of the truth.‖ This, though,
overlooks the issue of integrity and the scriptural bases of many religions which instruct not to
lie—which can include withholding information.
Critique of Article No 25
Shikoh, R. (2005, May 15). Islamic Business Ethics: Book Review [Review of the book Islamic
Business Strategies]. DinarStandard. Retrieved November 4, 2008, from
http://www.dinarstandard.com/management/EthicsBookReview051505.htm
In this article for the DinarStandard, an online magazine detailing ―Business Strategies
for the Muslim World,‖ Rafi-uddin Shikoh reviewed the book Islamic Business Ethics by Dr.
Bibliography 79
Rafik Issa Beekun. As Mr. Shikoh states at the beginning of his review, ―Islamic Business
Ethics… addresses key principles of management from an Islamic point of view with a stated
goal to help Muslims engaged in business to act in accordance with the Islamic system of
ethics.‖ Mr. Shikoh also informs the reader that the author uses verses, or Surah, from the Qur‘an
to magnify and explain Islamic business ethics.
Shikoh states that this book was written to appeal to everyday Islamic businesspeople, to
give them practical application, and not to delve into the minutia of Islamic ethic teachings.
Shikoh also states that the book was designed to address global business, the global economy,
and the technology used in its operation. Shikoh points out that the author, in addition to talking
about organizational ethics and leader‘s responsibilities from an Islamic perspective, also
compares these ethics and business practices to those of five other ―dominant ethical systems‖
around the world.
Shikoh briefly defines ethics in the manner most people are accustomed to thinking about
it, as ―a set of moral principles that distinguish what is right from wrong.‖
Shikoh states that the author points to certain fundamental aspects of Islamic ethics:
discovering intentions when judging another‘s ethical or unethical actions; freedom of belief; and
the individual experience of purification during one‘s life. As Shikoh writes, ―By behaving
ethically in the midst of the tests of this worldly life, Muslims prove their worth to God.‖
Shikoh states the author‘s points that maximizing profits should not be ―the ultimate goal
or only ethical outcome of trade in Islam,‖ but that neither does Islam ―reject profits or trade and
does not aim to remove all differences in income and wealth that may result in various social and
economic classes.‖ As identified in the article, the scripture used to support this is Surah 18:46,
Bibliography 80
which states ―Wealth and sons are allurements of the life of this world; But the things that
endure, good deeds, are the best in the sight of your Lord, as rewards, and best as the foundation
for hopes." This coincides with Judeo-Christian verses which talk about storing your treasures in
Heaven as opposed to on earth, because the things of earth fade, rot, and are otherwise eventually
destroyed. The treasures stored in Heaven are good works, which are recorded and follow a
person into judgment, according to the teachings of the Judeo-Christian faith. And throughout
the history of the Jewish nation, as well as Christian nations, the profits of hard work are
honorable and many classes have always existed and have been honored by God. So, for the
Muslim, the Jew, and the Christian, while riches and fame and other kinds of prosperity are good
things, it is treating others well—by being respectful and being honest—which should be the
main pursuits of a person; the rest are to come as rewards, not goals.
Shikoh illustrates the author‘s use of five foundational aspects which are at the heart of
Islamic ethics—unity, equilibrium, free will, responsibility, and benevolence—and addresses
each with corresponding ―business implications.‖ Regarding unity, which addresses the Islamic
concept of ―oneness of God,‖ businesses should not discriminate against any stakeholder—
whether an employee, vendor, supplier, investor, consumer, or other person—on the basis of
race, religion, gender, color, or other distinguishing point. Shikoh gives the author‘s example
from Surah 49:13, which states, ―O mankind! Lo! We have created you male and female, and
have made you nations and tribes, that you may know one another." This is also in harmony with
Genesis 1:26-28 from the Holy Bible, which states, ―Then God said, ‗Let Us make man in Our
image, according to Our likeness….in the image of God He created him; male and female He
created them. Then God blessed them, and God said to them, ‗Be fruitful and multiply; fill the
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earth and subdue it…‖
Shikoh also uses the author‘s example from Surah 25:67-68 to explain how the Islamic
leader should strive for balance and equilibrium in his or her organizational practices: ―Those
who, when they spend, are not extravagant and not niggardly [stingy], but hold a just (balance)
between those two extremes.‖ This could be used to illustrate fair wages and benefits, or pricing,
or other things which are negotiated.
Shikoh displays the authors listing of business trades which are unethical and
unallowable for the Muslim businessperson: selling alcohol or drugs, prostitution, or ―any kind
of trade involving uncertainty.‖ He also highlights the fact that the author uses examples from
Wall Street and savings and loan scandals in the United States and across the world, to
demonstrate instances where there has been an obvious lack of ethics. It is pointed out that the
author not only uses non-Muslim examples of unethical business practices, but also addresses the
reputation Muslims have for bribery, lack of transparency in business, discrimination across
stakeholders, breaking contracts, cheating, and lying.
The author, according to Shikoh, frames the discussion of ethics as a part of an
organization‘s ―social responsibility.‖ Shikoh also points out that this discussion on Islamic
social responsibility for an organization is strikingly similar to the global business practice and
trend of Corporate Social Responsibility (CSR). As the author and Shikoh point out, for the
Islamic businessperson (and leader), corporate social responsibility is directed towards
responsibility to one‘s stake holders, society, and nature.
Shikoh illustrates the author‘s concept of the organization‘s responsibility to its
stakeholders, and those stakeholders responsibilities back to the organization. Whereas Islamic
Bibliography 82
organizations and their leaders have a social responsibility to their employees for practicing
ethical hiring and firing, for establishing fair wages and maintaining safe working conditions,
and for guaranteeing employee privacy, the employees have the organization as their own
stakeholder and, as such, is responsible for having no conflicts of interest, being honest, and
improving their skills through training. Shikoh also goes on to list the authors various examples
of social responsibility toward other stakeholders such as supplier, buyers, financiers,
competition, investors, partners, consumers, and the general public, and states that the author
details in his book what should be typical principals and practices for Islamic leaders and
organizations.
Regarding making and fulfilling contracts with complete honesty, Shikoh uses the
authors quote of 2:282 from the Qur‘an, which states, ―…When you deal with each other in
transactions involving future obligations in a fixed period of time, reduce them to writing. Let
him who incurs the liability dictate, but let him fear his Lord God, and not diminish aught of
what he owes.‖ Clearly, for the Muslim leader and businessperson who wishes to remain ethical
and save their integrity, as with religious and non-religious businesspeople from other lands, all
place a prime importance on honoring contractual obligations as one aspect of ethical business
practices.
Shikoh also states that the author uses Islamic principles to discuss subjects such as the
ethical treatment of animals used in investigative research for pharmaceutical organizations, and
ethics which govern an organization‘s responsibility to the people and nature in the disposal of
manufacturing byproducts or other potential abuses of the environment and the potentially
dangerous implications on the health of citizens.
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Shikoh lists actions which the author suggests Islamic business leaders institute within
their organizations. These include: ―developing a Code of Ethics to guide the organization's
ethical principles in all its interactions; ensuring compliance by appointing key organization
actors to an ethics review panel; appointment of an ethics advocate to probe management's
decisions regularly; selection and training incorporating an employee's ethical responsibilities to
help set common expectations and understanding within the organization; and, adjusting the
award system to reward ethical behavior and encourage repetition.‖
Shikoh also informs the reader that the author lists practical responsibilities that the
Islamic individual has towards the organization which are based on Islamic teachings.
―These…include honesty and truthfulness; keeping your word; loving God more than trade;
supporting intra-Muslim trade; being humble; using mutual consultation in business affairs; not
dealing in fraud or bribery; and dealing justly.‖
Two further examples, illustrated through Islamic text, which Shikoh gives the reader of
the article, based on the writings of the author‘s book are:
…in discouraging the temptations to exaggerate and lie about one's products or
services during sales or marketing, the importance of honesty and truth is
referenced as laid out by this saying of the Prophet Mohammad (saaw): ‗The
merchants will be raised on the day of resurrection as evil-doers, except those
who fear God, are honest, and speak the truth.‘ Similarly, the following Ayah
(4:29) is used in support of Muslims not resorting to extravagance (the
extravagant behavior of the dot-com companies during the internet boom comes
to mind here): ‗O you who believe! Eat not up your property among yourselves in
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vanities: but let there be amongst you traffic and trade by mutual good-will: nor
kill (or destroy) yourselves: for verily God has been to you Most Merciful.‘
This article should make it clear to the reader that Muslim, Jewish, and Christian business
leaders, as well as other leaders, have much in common regarding business ethics and share
many tangents of faith.
Critique of Article No 26
An Interfaith Declaration: A Code of Ethics on International Business for Christians, Muslims,
and Jews. (1993). Center for Global Ethics. Retrieved October 22, 2008, from
http://astro.temple.edu/~dialogue/Codes/cmj_codes.htm
The Declaration, in its entirety, is based on a series of international, intercultural, and
interreligious meetings held between theologians, educators, and business and government
leaders representing the three ―monotheistic‖ world faiths of Judaism, Islam, and Christianity,
over several years and concluded in Amman, Jordan in 1993. The purpose was to move beyond
stereotypes and religious and cultural differences, and identify common personal and business
ethics shared by members of the three faiths which have their origins in the Abraham of the
Tanach (Judaism), Holy Bible (Christianity), and Qur‘an (Islam), and found in their Scriptures. It
discusses points of ethics and also how these traditional ethics are being supplanted by a new
breed of ethics which is less moral boundaries and requires less responsibility. The Web site also
lists a complimentary paper written by Simon Webly, entitled Values Inherent in the Interfaith
Declaration of International Business Ethics.
Critique of Article No 27
Shafer, I. H. (Ed.). (1998, September 5). ―Mission‖ Web page. Center for Global Ethics.
Bibliography 85
Retrieved November 7, 2008, from http://astro.temple.edu/~dialogue/Center/mission.htm
A Universal Declaration of a Global Ethic was created to find common ethical grounds
for organizations across all main religious and ethnic populations and cultures. It was created
primarily through The Center for Global Ethics, and is associated with the Global Dialogue
Institute, the Institute for Interreligious, Intercultural Dialogue, and the Journal for Ecumenical
Studies, all located at Temple University in Pennsylvania, and under the direction of Leonard
Swindler, Professor of Catholic Thought and Interreligious Dialogue at the university.
It is the mission of The Center for Global Ethics to:
…coordinate the work of thinkers, scholars and activists from around the world,
who are working to define, implement and promote policies of responsible global
citizenship. As profoundly interconnected members of a global community, we
recognize the need to develop and advance the acceptance of a viable and
sustainable Global Ethic.
Critique of Article No 28
Reingold, J. (2008, November 24). Meet Your New Leader Fortune, 145-146.
According to Ms. Reingold, the ―visionary leader‖ is becoming less desirable and the
―Lifeguard‖ leader is becoming the preferred style. The visionary leader is seen as largely
responsible for the current economic crisis. She says that a recent Harvard Center for Public
Leadership study showed that confidence and trust in business leaders has dropped considerably
further than for any other segment of leaders—including political and media leaders (Reingold,
pp. 145-146).
The visionary leader of the ―1980s,‖ through this year, was ―supposed to be omnipotent;‖
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a ―Lone Ranger with…loyal Tontos;‖ a celebrity focus of the organization who was ―worshipped
by business magazines;‖ and was subject to being removed by the Board of Directors for
admitting ignorance (Reingold, pp. 145-146). His or her evaluation, estimation of leadership
ability by others, pay, and bonuses were determined by their ability to execute ―ever more
dramatic moves, such as mergers, acquisitions, or other gambles….[with] [t]he stock
price…widely accepted as a real-time CEO report card, [and] the numerical proof of success…‖
(Reingold, pp. 145-146). Reingold quotes management expert C. K. Prahalad, who said, ―We
took the complex nature of leadership and converted it into a single metric by basing
compensation on the stock price‖ (p. 145, cited in text).
Reingold states that, with previous generations of leaders—such as the founders, and the
next generation which focused on maintaining the organization—the goals of the leaders were
centered on creating long-term success for the organization, the shareholders, and other
stakeholders. But, quoting economist Milton Friedman, for visionary leaders the ―social
responsibility of business [was] to increase profits‖ (p. 146). She says that, ―[w]hile the visionary
leaders talked about teamwork, they believed that they could control their firm‘s destiny by
themselves, citing any attempts to regulate their businesses as hostile and anticompetitive‖
(Reingold, p. 146).
Reingold uses the example of former Merrill Lynch CEO Stanley O‘Neal. When he took
over the reins in 2002, he had ―the express mission of catching up with the more aggressive
trading firms‖ (p. 146). She says that not only did he bet the entire 100-year-old company on
investments in subprime-backed mortgages and ―outsized leverage,‖ he also took home a ―$160
million severance package‖ when ―the bet went bad‖ (Reingold, p. 146).
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Reingold says that the visionary leadership style ―has failed‖ and that Enron and the dot-
com bubble burst were some of the first signs that visionary leadership had major faults (p. 146).
She references Rakesh Khurana, of the Harvard Business School, in saying that, while
―‘charismatic‘ leaders didn‘t boost performance in the long run….[still] the visionary persevered,
his gambler‘s instincts honed and rewarded in a lightly regulated, winner-take-all environment‖
(Reingold, p. 146).
The Lifeguard style of leadership, on the other hand, is arising out of this ―financial
chaos‖ to lead with values that suit this ―environment of increased regulation, diffuse power, and
stagnant stock prices‖ (Reingold, p. 146). According to Reingold, the Lifeguard is focused on
long-term success, and has situational awareness and the ability to study the environment and
identify ―weak signals,‖ calling for a shift in strategy and even ―the courage to….tear up the
strategic plan‖ (p. 146). She states that the Lifeguard leadership approach is more conducive to
an ―interconnected, ever more turbulent world‖ (Reingold, p. 146). These leaders are not afraid
to admit to what they don‘t know, nor are they afraid to work with and take the advice of others,
or to ask for help (Reingold, p. 146). Other characteristics which make the Lifeguard so
attractive is that he or she works well in and with teams, does not have to be the one setting the
rules and is happy to follow the rules set by others, and is not a leader just for the money but also
for intrinsic reasons (Reingold, p. 146).
Reingold says that Good to Great author Jim Collins believes that it is a leader‘s
―legislative‖ skills which now make him or her attractive and not ―executive‖ skills; that ―top
CEOs will be those who are able to create the conditions for things to get done rather than hand
down orders;‖ and, like John F. Kennedy, the ask a lot of questions when they don‘t know the
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answers (Reingold, p. 146).
She quotes the director of Harvard‘s Center for Public Leadership, David, Gergen, who
says, ―The CEO of the future is going to have to be someone who deals well with government‖
(Reingold, p. 146). The CEO, according to Reingold, now has to more heavily weigh the ―world
of competing entities, ranging from regulatory agencies to angry shareholders, from consumers
to foreign powers‖ (p. 146).
Reingold tells how Xerox CEO Anne Mulcahy and Home Depot CEO Frank Blake are
both implementing ways to motivate their employees without using more money to do so. They
are turning more and more to empowerment. They give employees ―more decision-making
power,‖ increased recognition for the good work they do, and inspire the employees to be
intrinsically motivated—focusing on the ―challenge‖ and not just the money (Reingold, p. 146).