There are several stores illustrate unethical leadership taken place in a working environment every single day. Unfortunately, that type of behavior still does not provide clear boundaries of what unethical leadership should incorporate. Before defining unethical behavior, need clearly to describe the meaning of ethics and ethical behavior. Whom are ethical people are? This is people who recognize the difference between right and wrong. In addition, individuals consistently strive to set an example of ethical conduct. In a setting of business environment, ethics plays important and crucial role. It is important to be fair and remain honest to relationships among internal and external environment. Ethical individuals strive to treat others as would like to be treated ourselves. In a business setting, behaving ethically can help to build customer loyalty, avoid or reduce legal problems, as well as attract and retain talented and valuable employees.
Defining Unethical Leadership
Definition of unethical behavior must be stated specific and broad at a same time and clearly stated what society considers being moral behavior. Brown and Mitchell, in their 2010 Business Ethics Quarterly article Ethical and Unethical Leadership: Exploring New Avenues for Future Research , define unethical leadership as 'behaviors conducted and decisions made by organizational leaders that are illegal and also can violate moral standards. those that impose processes and structures that promote unethical conduct by followers.'
According to this definition, it is more acceptabl to determined the meaning of what the “moral standards” are and what standards ethical leaders are expected to follow. It is essential to maintain high moral standards while being a leader. Every leader is set up an example; it is an individual who leads the company or makes decisions based on fairness, ethical guidelines, rather than personal, political, or financial consideration.
Unfortunately, some leader’s inability and lucking of clear thinking beyond their personal interests and greediness lead to unethical behavior, but not all unethical leadership choices are made intentionally. Ethics and ethical leadership have become an essential component among organizational leaderships, professionals, and employees across organizations. Ethical as well as unethical actions, conflicts, challenges happen every day among well-educated individuals as well as successful companies and large corporations. Every company has employees, diverse staff, with unique personalities, and different behaviors. A great example is Martha Stuart inside company fraud case.
Ethics are the moral codes, several rules that allow businesses to perform and succeed in a capital-intensive economy. Ethics defines how successful or not business runs and how peoples live their lives; in other words, ethics business ethics go hand to hand with human behavior and values. The main component of ethics is honesty, transparency and strong moral principles.
Unfortunately, unethical leadership style can benefit in seeking the accomplishment of organizational goals of the company. Every company has unethical individuals and leaders who can encourage employees to conduct unethical and wrongful act within the company or an organization (Thornton l, 2012). It is several examples of unethical practice; Abusive Supervision, Tyrannical leadership, Toxic leadership. All of them could be found in Enron financial scandal. These are the challenges that unethical leaders faced today-that which test their integrity and credibility, either for personal, monetary or status gain.
Types of Unethical Leadership
Unethical leadership appears in a wide variety of forms and happens for a variety of reasons. Sometimes unethical leadership is motivated by greed and involves harming others to make more profit. Unethical leadership may also happen when leaders fail to take the time to consider the impact of their choices on the many stakeholders involved. Decisions with unintended consequences can be just as harmful as intentionally unethical decisions. If it take as an example ethics in business settings it is completely different from laws because in some circumstances it may not be illegal to engage in unethical behavior (Gomez-Mejia & Balkin, 2002).
According to Hoyk and Hersey (2009), an organization in which coworkers ignore, justify, or accept unethical behavior, is supporting the viewpoint of the transgressor. the majority of the groups accepts moral standarta. and a behavior or action by an employee exhibits behaviors or actions that do not reflect what is considered to be the norm; the group would deem the behavior or action unethical (Kish-Gephart, Harrison, & Trevino, 2010). Unfortunately, unethical behaviors that occur most frequently within the business settings usually are covering up some existing issues within the company. Some of the examples consist of short-cutting quality of work ,which leads to poor performance; another example is abusing sick days and lying to customers (Gomez-Mejia & Balkin, 2002). Bowditch, Buono, and Stewart (2007) posit there are growing numbers of occurrences when employees experience situations where peers and supervisors encourage unethical behavior. For instance, unethical behavior may be an employee looking in the opposite direction of wrongdoing, failure to report wrongdoings, or directly engaging in an unethical activity (Bowditch et al., 2007). Cheney (2008) stated it is essential to understand how organizational cultures suppress or promote certain ethical practices (Bisel, Kelley, Ploeger, & Messersmith, 2011).
It is imperative to condemn unethical behavior and discourage the imitative practices, reducing the risk of an organizational culture that promotes political backstabbing that drives away talent and takes away the energy of the remaining employees (Gomez-Mejia & Balkin, 2002). Every company has written rules in the form of the employee handbook; it is consist of the company’s guidelines, rules, and regulation that employees should follow the written standards of the organization. Not every employee whose behavior is unethical thinks that his or her wrongful act will impact the organization or business financially. For example, counterproductive work behavior is a type of behavior where actions go against the legitimate interests organization’s goals (Jex & Britt, 2008). Forms of counterproductive behavior might include high and often turnover, poor or ineffective job performance, unsafe behavior, as well as, less common forms such as violence, theft, substance abuse, and sexual harassment (Jex & Britt, 2008). These wrongful actions might impact the organizations financially and can cost the organization thousands of dollars each year (Jex & Britt, 2008). Therefore, it is critical to understand unethical behavior in organizations. Unethical behaviors lead to detrimental consequences for others through ignoring rules, standards, regulations, and company guidelines (Tonus & Oruç, 2012). All the damaging consequences lead to slowing performance of the company and significantly reduce growth and the company’s profit. Unethical actions foster an environment of conflict, disrupt the company culture, and minimalize employee commitment, performance, and inspiration (Tonus & Oruç, 2012). When employee commitment, performance, and motivation decrease, the organization suffers significantly. As a result, companies want to prevent unethical behaviors and to promote ethical behaviors. The best option is through understanding the driving forces behind unethical decision-making in order to predict behavior.
It is five most unethical behaviors in the work place. Roughly 120 million people walk into a workplace somewhere in the U.S. Within the past year, almost half of these workers personally witnessed some form of ethical misconduct, according to a recent survey conducted by the Washington, D.C.-based Ethics Resource Center (ERC).
Schwartz points out that the issue is not workers being privy to the CFO committing fraud. More likely, it is someone who lied to a supervisor or handed in a false expense report. Listed below, according to the ERC study, are the five most frequently observed unethical behaviors in the U.S. workplace.
1. Misusing company time
Whether it is covering for someone, who shows up late or altering a timesheet, misusing company time tops the list. This category includes knowing that one of coworkers is conducting personal business on company time. By 'personal business, the survey recognizes the difference between making cold calls to advance your freelance business and calling your spouse to find out how your sick child is doing.
2. Abusive behavior
Too many workplaces are filled with managers and supervisors who use their position and power to mistreat or disrespect others. Unfortunately, unless the situation the person is in involves race, gender or ethnic origin, there is often no legal protection against abusive behavior in the workplace.
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3. Employee theft
According to a recent study by Jack L. Hayes International, one out of every 40 employees in 2012 was caught stealing from their employer. Even more startling is that these employees steal on average 5.5 times more than shoplifters ($715 vs $129). Employee fraud is also on the uptick, whether its check tampering, not recording sales in order to skim, or manipulating expense reimbursements. The FBI recently reported that employee theft is the fasting growing crime in the U.S. today.
4. Lying to employees
The fastest way to lose the trust of employees is to lie to them, yet employers do it all the time. One of out every five employees report that their manager or supervisor has lied to them within the past year.
5. Violating company internet policies
Cyberslackers. Cyberloafers. These are terms used to identify people who surf the Web when they should be working. It is a vast , multi-billion-dollar problem for companies. A survey conducted recently by Salary.com found that every day at least 64 percent of employees visit websites that have nothing to do with their work.
The ERC study points out that most American workers and employers do the right thing. The survey reveals that most follow the company's ethical standards of behavior, and are willing to report wrongdoing when it occurs, except if it relates to the company’s Internet use policy.
These results are retrospective and do not reflect the increasing trend of employees’ use of social media at work for personal purposes. According to a Forbes study, 64% of employees visit non-work related websites daily and wasted the most time on these social sharing sites (in descending order): The question is how much control an employer should have over its employees' use of social media. This is an emerging issue and one where the rules and ethical guidelines have not caught up with technology. One of the most challenging things for employers to monitor is what an employee is looking at his/her computer screen. Short of walking around frequently and checking it out, as a possible deterrent to improper use, an employer has to trust that employees will use good judgment when it comes to the use of social media in the workplace.
Part of the problem with defining social media abuse is how everyday Internet use is in our daily personal and professional lives. In an age when employers expect workers to respond to client emails immediately and social networking sites reload with new information every minute, it is often hard to define the limits between reasonable and abusive. Businesses need to be proactive in the workplace with establishing these limits, creating a clear and comprehensive acceptable use policy and communicating it to employees through presentation and workshops. Exellent communication can generate a workplace-wide consensus on the behavior that falls outside acceptable boundaries.
Most of all the Internet use policy should be tied to the general issue of ethics in the workplace. The use and abuse of social media in the workplace is an excellent way to give life to the provisions in a code of ethics.
Two of the five most unethical practices relate to the abuse of social media at work: violating company Internet policy and misusing company time. Those who excessively surf the Internet at work for personal reasons are stealing from their companies. They are being paid for work when they are not doing so. The ethics policy must be clear on this matter. In the end it is no different from coming in late; leaving early; or taking long lunch hours and being paid for that time.
Blog posted by Dr. Steven Mintz, aka Ethics Sage, on June 25, 2015. Professor Mintz is on the faculty of the Orfalea College of Business at Cal Poly San Luis Obispo. He also blogs at: www.ethicssage.com.
Martha Stewart is one of the few business mavens who can still claim widespread popularity after a highly-publicized scandal. She is the founder and former CEO of Martha Stewart Living Omnimedia Inc., a company with interests in publishing, television, merchandising, electronic commerce, and related international partnerships. In the early 2000s, America’s most famous homemaker became the center of headlines, speculations, and eventually a federal investigation concerning her stock trading. Martha Stewart was accused of insider trading after she sold four thousand ImClone shares one day before that firm’s stock price plummeted. Although the charges of securities fraud were thrown out, Ms. Stewart was found guilty of four counts of obstruction of justice and lying to investigators. She was sentenced to five months of prison, five months of house arrest, and two years of probation. After her release from prison, Martha Stewart involved herself in a variety of ventures, including magazines, a short-lived reality television show “The Apprentice: Martha Stewart,” “The Martha Stewart Show,” and branded items sold by flower shops, KB Homes, and Macy’s. Martha Stewart still controls much of Martha Stewart Living Omnimedia.
Even though she was barred from acting as director of the company for five years, Stewart continues to control about 50 percent of Martha Stewart Living Omnimedia Inc. stock and about 90 percent of voting stock. While it often takes many years for businesspeople to regain trust after corporate misconduct, Martha Stewart remains a beloved household icon for thousands of loyal fans. Martha Stewart’s lucrative career includes stockbroker, caterer, business owner, and home living expert. Born in 1941 as Martha Kostyra, Stewart developed a passion for cooking, gardening, and home-keeping at an early age. She learned the basics of cooking, baking, canning, and sewing from her mother; her father introduced her to gardening. After marrying Andrew Stewart in college, Martha Stewart became a successful stockbroker on Wall Street. However, she never forgot her childhood passions, and eventually, she left the stockbroker business to open a gourmet-food shop that later became a catering business in Westport, Connecticut. She used her distinct visual presentations and stylish recipes for her catering business as a source for her first book, the bestselling Entertaining, which was first published in 1982.
Stewart's natural business instincts and leadership skills helped her to transform her small business into a media empire. She joined Kmart as an image and product consultant in 1987and persuaded the retailer to sell her growing line of products. She eventually became partners with the INSIDER TRADING SCANDAL The scandal that would threaten Stewart’s career stemmed from her association with Imclone System, a biopharmaceutical company in which Stewart owned stock. Stewart sold 4,000 shares of ImClone stock on December 27, one day before the Food and Drug Administration refused to review ImClone System’s cancer drug Erbitux. The company’s stock tumbled following the FDA’s announcement. A similar situation occurred with a number of other ImClone insiders, including the company’s counsel John Landes, who dumped $2.5 million worth of the company’s stock on December 6; Ronald Martell, ImClone’s vice president of marketing, who sold $2.1 million worth of company stock on December 11; and four other company executives who cashed in shares between DeceMartha Stewart denied that she engaged in any improper trading when she sold her shares of ImClone stock. On December 27, Stewart says she was flying in her private jet to Mexico for a vacation with two friends. En route, she called her office to check her messages, which included one from her broker Peter Bacanovic, with news that her ImClone stock had dropped below $60/share. Stewart claims she had previously issued a “stop-loss” order to sell the stock if it fell below $60/share. Stewart called Bacanovic and asked him to sell her 3,928 shares; she also called her friend Sam Waksal, but could not reach him. Stewart’s assistant left a message for Sam Waksal saying, “Something’s going on with ImClone, and she wants to know what it is. She’s staying at Los Ventanos.” Waksal did not call her back. At about the time Stewart made her sale, she was on her way to Mexico with friend Mariana Pasternak.
However, Stewart's explanation that she unloaded her stock because of a prearranged sele order collapsed when Douglas Faneuil, the broker's assistant who handled the sale of the ImClone stock for Stewart, told Merrill Lynch lawyers that his boss, Peter Bacanovic, had pressured him to lie about a stop-loss order. Although he initially backed Stewart's story, he later told prosecutors that Bacanovic prompted him to advise Stewart that Waksal family members were dumping their stock and that she should consider doing the same. During interviews with law enforcement officials, Faneuil said, “I did not truthfully reveal everything I knew about the actions of my immediate supervisor and the true reason for the sales.” He reportedly received money or other valuables for hiding his knowledge from investigators. Faneuil pleaded guilty to a misdemeanor charge on October 2. Martha Stewart resigned from her board membership of the New York Stock Exchange the next day. Faneuil was later fined $2,000 but did not receive jail time. Merrill Lynch fired Faneuil after he pleaded guilty; Bacanovic was also fired for declining to cooperate with investigators looking into trading activity of ImClone Systems Inc. shares.mber 12 and December 21. The event was too coincidental to be ignored.
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