1 00:00:05,980 --> 00:00:11,320 [Arthur] If we are in a position of power, if we are in a position of leadership, um, 2 00:00:11,329 --> 00:00:15,149 it's simply not enough to just have the title of leadership. We have to assume that challenge, right? 3 00:00:28,560 --> 00:00:29,860 [Professor Robert Prentice] Ethical leaders 4 00:00:29,860 --> 00:00:35,660 both act ethically as an inspiration to others, and communicate and manage their organization's 5 00:00:35,660 --> 00:00:38,760 culture so as to promote ethical action. 6 00:00:39,860 --> 00:00:43,900 So how does a leader effectively communicate and manage 7 00:00:43,910 --> 00:00:47,390 an organization's culture to create an ethical action? 8 00:00:48,760 --> 00:00:53,120 [Will] Effective leaders lead by example, and that's sort of setting the tone. 9 00:00:53,680 --> 00:00:58,920 [Melissa] As far as with morals, I think somebody who has respect for other people. 10 00:00:58,920 --> 00:01:03,559 [Claire] The most important attribute in being an effective leader is cultivating a self-awareness. 11 00:01:04,599 --> 00:01:08,340 [James] They know, they are responsible for a group of people. 12 00:01:09,820 --> 00:01:14,720 Well, leaders must establish their organization's ethical norms. 13 00:01:17,000 --> 00:01:21,180 They must ask: "What does our organization stand for?" 14 00:01:21,520 --> 00:01:24,160 They should set high expectations. 15 00:01:26,150 --> 00:01:27,840 Leaders must also effectively 16 00:01:27,840 --> 00:01:33,460 communicate to others both the contents of those ethical norms and the intensity of 17 00:01:33,460 --> 00:01:36,810 the organization's commitment to upholding them. 18 00:01:37,820 --> 00:01:44,520 [Carlos] Set expectations. Express what you want done, what you expect, how you expect it to be done. 19 00:01:45,240 --> 00:01:48,060 It's a lot easier for people to meet your standards 20 00:01:48,060 --> 00:01:50,340 and and to meet your expectations if they know them. 21 00:01:51,520 --> 00:01:55,580 The careful drafting, with input from others in the organization, 22 00:01:55,590 --> 00:01:58,430 of a code of ethics can be helpful. 23 00:01:58,430 --> 00:02:02,450 Then, leaders must implement employment practices 24 00:02:02,450 --> 00:02:04,930 consistent with these overall goals. 25 00:02:05,540 --> 00:02:08,419 Of course, they must hire good people and punish those 26 00:02:08,419 --> 00:02:11,120 who violate the organization's ethical norms. 27 00:02:11,580 --> 00:02:14,260 Just as importantly, they must reward those whose 28 00:02:14,260 --> 00:02:18,030 conduct embodies the organization's ethical standards. 29 00:02:19,360 --> 00:02:24,580 [Scott] The most frustrating experience as a young employee is to work for a leader who 30 00:02:24,590 --> 00:02:28,350 loves the gray area, doesn't really give you an upfront answer about everything. 31 00:02:28,940 --> 00:02:35,360 You know, it's easy to say what you're doing but you actually need to, you know, talk the talk, 32 00:02:35,370 --> 00:02:36,970 and walk the walk, as they like to say. 33 00:02:36,970 --> 00:02:38,349 [Nikki] You can all agree that you have these 34 00:02:38,349 --> 00:02:41,730 core values in your company and maybe put some posters on the wall, but if you never 35 00:02:41,730 --> 00:02:46,530 have to talk about it, and figure it out how it relates to your actual day-to-day work, 36 00:02:46,530 --> 00:02:48,210 then it's all fluff. 37 00:02:50,280 --> 00:02:52,980 Leaders must also be aware of the cognitive 38 00:02:52,989 --> 00:02:59,500 and psychological shortcomings, situational factors, and social and organizational influences 39 00:02:59,500 --> 00:03:04,000 that can cause people to make irrational and self-defeating decisions in all areas of their lives. 40 00:03:09,000 --> 00:03:15,680 It turns out that leaders can use psychological knowledge to nudge employees to act more ethically. 41 00:03:17,040 --> 00:03:21,080 So, leaders should keep in mind: People are more likely to steal from their 42 00:03:21,080 --> 00:03:27,660 firms or mistreat their firms' customers if they feel as though they themselves have been mistreated. 43 00:03:28,440 --> 00:03:32,000 So treating employees fairly is an extremely critical part of cultivating 44 00:03:32,010 --> 00:03:34,750 an ethical workforce. 45 00:03:37,540 --> 00:03:41,760 [Howard] As a leader, it is your responsibility to put others ahead of you sometimes. 46 00:03:42,600 --> 00:03:45,659 People tear over things at night, and if they do 47 00:03:45,659 --> 00:03:49,569 that, they're not going to sleep. They're going to feel awful, and you know, they may 48 00:03:49,569 --> 00:03:50,849 quit, or they may go somewhere else. 49 00:03:51,700 --> 00:03:54,060 You want them to be very happy and to be, feel very 50 00:03:54,060 --> 00:03:57,260 good about the work that they are doing, on a constant basis. 51 00:03:59,060 --> 00:04:03,299 Leaders must explain the reasons for taking the actions that they take, for that helps 52 00:04:03,299 --> 00:04:07,390 employees accept decisions even if they disagree with them. 53 00:04:07,390 --> 00:04:13,069 Also, Studies show that employees are more likely to act unethically if they are exhausted, 54 00:04:13,069 --> 00:04:16,529 so to overwork employees is to court disaster. 55 00:04:19,519 --> 00:04:22,580 Relatedly, people tend to act less ethically 56 00:04:22,589 --> 00:04:27,449 if they are under acute time pressure, so this is another reason to be reasonable in 57 00:04:27,449 --> 00:04:30,089 placing demands upon employees. 58 00:04:31,680 --> 00:04:35,200 Professors Margolis and Molinsky studied several organizations 59 00:04:35,210 --> 00:04:42,089 and found that some wisely built into their processes time for pauses and second looks. 60 00:04:43,120 --> 00:04:48,979 [Dorine] So in hyper-competitive environments, there is incentives to be number one or incentives 61 00:04:48,979 --> 00:04:55,319 to be at the top of your class or at the top of sales, or whatever the case may be. 62 00:04:55,320 --> 00:05:00,340 And because of those incentives, people will do whatever they need to do. 63 00:05:01,260 --> 00:05:04,280 People want great jobs. People want to make a lot of money. 64 00:05:04,280 --> 00:05:07,300 People want to be successful, and so, they're 65 00:05:07,309 --> 00:05:10,949 willing to do whatever they can to get to that point. 66 00:05:13,880 --> 00:05:16,300 Remember, employees naturally focus upon 67 00:05:16,339 --> 00:05:22,469 goals that are set for them by superiors. If unrealistic goals are set, especially those 68 00:05:22,469 --> 00:05:27,379 that carry punishments for failing to meet them or extravagant rewards for exceeding 69 00:05:27,379 --> 00:05:32,919 them, then employees will tend to lose focus on the ethical aspects of their actions. 70 00:05:34,180 --> 00:05:37,600 They will concentrate entirely on meeting the goal. 71 00:05:37,600 --> 00:05:40,919 Realistic goals and moderate rewards for meeting them 72 00:05:40,919 --> 00:05:43,499 are a good combination. 73 00:05:45,280 --> 00:05:51,420 Really having a set follow-up schedule in terms of making sure that everyone's on the same page from 74 00:05:51,420 --> 00:05:53,840 an ethical perspective is hugely important. 75 00:05:54,760 --> 00:05:59,320 Whether you're scheduling monthly meetings to just go over how things are going 76 00:05:59,320 --> 00:06:01,300 with your employees and you. 77 00:06:01,300 --> 00:06:02,920 Who knows? I mean, maybe your employees are 78 00:06:02,929 --> 00:06:07,189 scared of you, or what have you. You know, it really takes that extra, in my opinion, 79 00:06:07,189 --> 00:06:11,389 that personal touch, to connect with your employees and make sure that, you know, they 80 00:06:11,389 --> 00:06:14,189 really understand what they're doing from an ethical perspective. 81 00:06:15,569 --> 00:06:20,089 You may not have considered this, but the evidence is clear that people are more likely 82 00:06:20,089 --> 00:06:26,009 to act unethically if they find themselves in a dirty or cluttered workplace or if they 83 00:06:26,009 --> 00:06:28,689 find themselves in a dimly lit space. 84 00:06:29,440 --> 00:06:32,360 Cleanliness and good lighting can go a long way toward 85 00:06:32,369 --> 00:06:34,409 fostering ethical behavior. 86 00:06:36,780 --> 00:06:39,500 [Tony] I was in a company that was, you know, very ethically sound. 87 00:06:40,220 --> 00:06:44,420 It was definitely an open space, it was an office without cubicles, you know. 88 00:06:44,420 --> 00:06:48,260 We were in a big building and there were hundreds of employees with no cubicles, 89 00:06:48,279 --> 00:06:51,739 so that just encouraged more conversations and more interaction. 90 00:06:52,180 --> 00:06:56,920 I think that just kind of told me about the character of my company 91 00:06:56,920 --> 00:06:58,920 and my fellow employees. 92 00:07:00,440 --> 00:07:05,300 Finally, studies show that employees will tend to act more ethically if they are frequently 93 00:07:05,309 --> 00:07:10,289 reminded of the importance to the firm of living up to its espoused values. 94 00:07:10,800 --> 00:07:16,440 Effective leaders create legends that illustrate commitment to the firm's culture. 95 00:07:16,720 --> 00:07:22,140 For decades, accounting firm Arthur Andersen was the most admired accounting firm in the world, 96 00:07:22,140 --> 00:07:26,840 in part because of its employees' belief in the origin story of how founder Arthur Andersen 97 00:07:26,840 --> 00:07:34,340 told a large client that there was "not enough money in Chicago" to induce him to fudge the numbers. 98 00:07:34,340 --> 00:07:41,340 Unfortunately, the leaders of Andersen forgot this lesson and started emphasizing revenue 99 00:07:41,349 --> 00:07:47,149 over character, which is why the firm no longer exists. 100 00:07:48,920 --> 00:07:54,140 How you treat each other, how you treat the customer, how you treat the world around you. 101 00:07:54,399 --> 00:07:59,739 What is important is at the end of the day, is the dollar important? Is it about that, 102 00:07:59,739 --> 00:08:04,569 that corporate social responsibility, that buzz word everyone is talking about? Is it 103 00:08:04,569 --> 00:08:09,739 making sure the community you're working in benefits from your work as much as you do? 104 00:08:09,739 --> 00:08:14,859 Recognizing those effects that we have on the world around us and taking responsibility for them, if we don't, 105 00:08:14,860 --> 00:08:18,540 it's going to affect the corporate culture. If you do, then it's going to create a corporate 106 00:08:18,550 --> 00:08:22,550 culture that people respect from the inside and from the outside. 107 00:08:24,289 --> 00:08:30,860 While there is no single correct way to create and foster an ethical organizational culture, 108 00:08:30,860 --> 00:08:35,509 committed leaders will benefit by keeping these points in mind, and by remembering that 109 00:08:35,509 --> 00:08:39,269 all their actions send messages. 110 00:08:41,960 --> 00:08:44,500 Lead by example. You have to show them what 111 00:08:44,750 --> 00:08:49,480 you want done and how you want it done, based on your own actions. That way, even in the 112 00:08:49,480 --> 00:08:53,230 cases where you are not around, they can say, "What would so and so do?" 113 00:08:53,230 --> 00:08:59,750 I would also say that reinforcing it, reinforcing the ethics upon those who work for you is 114 00:08:59,750 --> 00:09:00,910 hugely important also. 115 00:09:00,910 --> 00:09:03,500 The organizational culture that supports gut 116 00:09:03,500 --> 00:09:10,500 feeling, that supports thinking before action can significantly raise the possibility of 117 00:09:10,620 --> 00:09:12,460 more ethical and moral decisions. 118 00:09:12,460 --> 00:09:14,019 You really want to build a company where people 119 00:09:14,019 --> 00:09:17,730 are going to rally behind a shared set of values. You have to make people talk about 120 00:09:17,730 --> 00:09:20,050 it and relate it to their day-to-day work. 121 00:09:20,050 --> 00:09:22,720 The earlier we understand what those are, 122 00:09:22,720 --> 00:00:00,000 I think, will help to develop a culture where it's not so hard to make right decisions.