Business Ethics in Action

Domènec Melé, Business Ethics in Action: Seeking Human Excellence in Organizations. Palgrave Macmillan, July 2009.

TABLE OF CONTENTS:

Part One – INTRODUCTION TO BUSINESS ETHICS
The Role of Ethics in Business
Business in Society: Beyond the Market and Laws?
Cultural Diversity and International Standards for Business
PART TWO – THE INDIVIDUAL WITH THE ORGANIZATION
Ethics, at the Core of Human Action
Individual Responsibility and Moral Judgements in Business
Frequent Ethical Issues in Business
PART THREE – MANAGERIAL ETHICS
The Purpose of the Firm and Mission-Driven Management
Use and Misuse of Power
Human Virtues in Leadership of Organizations
PART FOUR – ORGANIZATIONAL ETHICS
Ethics in Organizational Cultures and Structures
Work and Worker’s Rights Within the Organization
Ethics in the Organizing of Marketing
Part Five – SOCIETAL BUSINESS ETHICS
The Social Responsibility and Accountability of Business
Corporate Citizenship
Conclusion

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Excerpts:

Part 3, Chapter 9:
Human Virtues in Leadership of Organizations


Leading Organizations: Authority, not only Power

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Moral Character in Leadership

Leadership is a complex matter that depends on a multiplicity of factors, including competencies.  These include strategic abilities and technical skills, such as a vision of business, an orientation towards the client, business networking, persuasion and negotation abilities, communication skills, organization, a capacity of problem-solving, good sense in allocating resources, innovativeness and entrepreneurship, and the ability to manage crises.  Other competencies are crucial for the moral character of the leader.

Many have pointed out that leadership requires moral character, or have stressed the importance of being a ‘moral leader’.  ‘It is character through which leadership is exercised’, stated Drucker.  Other scholars note that ethics is at the core of leadership, and virtues are the leader’s moral capital. It is not our aim to discuss existing theories of leadership but it is worth mentioning some of them.

Ethics, explicitly or implicitly, is present in several theories and approaches to leadership.  Historically, the first theories on leadership, which emerged in the first three decades of the 20th century,  sought to find universal personality traits specific to people generally viewed as leaders, or at least some traits they showed more strongly than others.  The correlations found were modest, although these studies provided an initial analysis.

Northouse (2007) suggests that recent studies emphasize five essential traits of a leader: (1) determination (2) integrity (which Northouse connects with honesty and trustworthiness) (3) intelligence (to deal effectively with the situation and the followers’ needs) (4) self-confidence (i.e., confidence in oneself or one’s own abilities, but not beyond them) and (5) sociability (i.e., the quality of being sociable and the ability to create cooperative relationships.

Kirkpatrick and Locke (1991) mention honesty and integrity, self-confidence (associated with emotional stability) and the desire to lead but not to seek power as an end in itself, which can be related to unselfishness and magnanimity.  Apart from these virtues, they also mention some abilities or skills, such as drive (a broad term that includes achievement, motivation, ambition, energy, tenacity and initiative), cognitive ability, and knowledge of the business.  Some of these key character traits are actually moral virtues.

In research directed by James Collins and published as a book entitled Good to Great, which subsequently became a bestseller, he found that professional will and humility are paramount leadership qualities.

Serving and  Fostering a Sense of Service in Others

In 1978, James G. Burns presented a key distinction between two kinds of normative leadership: transactional leadership, and transforming (later termed transformational) leadership.

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SERVANT LEADERSHIP

A third type of leadership, which is not necessarily opposed to the transformational kind, is known as servant leadership.  This theory defines leaders as those who want to serve others and, thus, foster in their followers a similar attitude…

More generally, this theory also emphasizes the sense of stewardship for people and resources adopted by managers within an organization.  Robert Greenleaf, a former senior manager of the American telecom company AT&T, is recognized as the father of servant leadership through his book Servant Leadership, first published in 1977.  However, traditions in ancient wisdom had already presented a spirit of service and stewardship as essential for authentic leadership.

Servant leaders, as do transformational leaders, elevate people.  Values and virtues are essential for servant leadership.  In Servant Leadership, Greenleaf mentions, among other qualities of a leader, the ability to withdraw and reorient oneself to self-improvement, acceptance and empathy toward others, listening and seeking to understand them, as well as foresight, awareness, perception, persuasion, healing and serving.  Several other authors hold positions very similar to that of Greenleaf.

Another theory based on human motivations, called transcendental leadership, was proposed by Cardona*, following Pérez-López’s thinking.  In this theory, the concern for others’ needs and a sense of service, which both require practical rationality and virtues, are also central.

*Cardona, P. “Transcendental Leadership”, Leadership & Organization Development, 21, 4 (2000), 201-6.