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Today
• “Workplace ethics” is much more than a belief – it is a set of things to do
– The “belief” part is critically important– But knowing the importance of actions is not enough
• “Actions speak louder than words”
• First, let’s tell a story• Second, let’s review the “traps”
a. Disconnected Leader
b. Compromised Leader
c. Non-trusted Leader
d. Disliked Leader
e. Oblivious Leader
• Third, let’s talk about actions
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Ford Motor Company
• Pinto edict: not an ounce over 2,000 lbs, and not a cent over $2,000
• Ford was aware of a defect:– In test crashes over 25 miles per hour, the gas tank
always ruptured
• But, no “fix” because (Mark Dowie. "Pinto Madness.“ 1977) : – Ford owned the patent on a much safer gas tank, but– Ford had already invested in the assembly line– Decision: make the Pinto anyway, "even though.“– Ford delayed the “fix” for eight years: “its internal 'cost-benefit
analysis, which places a dollar value on human life, said it wasn't profitable to make the changes sooner."
• Note Lee Iacocca: "Safety doesn't sell"
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Ford Motor Company
• Ford Pinto crashes: estimated 500 deaths – Maybe as many as 900
• Did anyone go to Iacocca and tell him? – "Hell no," replied an engineer who worked on the
Pinto, – "That person would have been fired. Safety wasn't a
popular subject around Ford in those days. Whenever a problem was raised that meant a delay on the Pinto, Lee would chomp on his cigar, look out the window and say 'Read the product objectives and get back to work.'"
• Moral: Ford leadership focused on its internal requirements and lost sight of those of its customers – or was it worse?
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Johnson & Johnson
• “Tylenol Scare” in 1982– Seven users died in the Chicago area– Extra Strength Tylenol deliberately contaminated with cyanide– Within a week, company pulled back 31 million bottles– The crime was never solved– Tylenol sales collapsed
• McNeil Consumer Healthcare (J&J) rebuilt/recovered – Invented first inherently tamper-proof capsule: Tylenol Gelcaps– Recaptured 92% of capsule sales lost after the cyanide incident– Result: revolutionized the industry, and beyond
• Today– Tylenol controls ~ 35% of pain killer market in North America
• On the ethics horizon– Acetaminophen overdose is responsible for more ER visits than
any other medicine on the market
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Let’s Compare Ford and J&J
• Which company had the cultural issue?
• What was that issue?
• How did that company get to such a position?
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Let’s Compare Ford and J&J
• Which company had the cultural issue?– Ford: the ethical problem existed throughout
the process
• What was that issue?– Pressure: scheduling, financial/business
objectives and survival– Examine top leadership – the “mirror” effect
• How did Ford get to such a position?– Devaluation of the ethical “compass”
a. The Disconnected Leader: Lost Touch
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a. The Disconnected Leader: Lost TouchRecent DDI study: What are employees’ needs?
Employee
Rank %
Learn/Grow 1 78
Interesting Work 2 77
Good Manager 3 75
Proud of Entity 4 74
Advancement 5 73
Stability/Security 6 70
Creative/Fun Culture 7 67
Compatible Team 8 66
Work-Life Balance 9 65
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The Workplace Disconnect Howard, Erker and Burce. Selection Forecast. DDI. 2007
Job Seeker Manager Difference
Learn & grow 1 (78%) 3 (68%) 10%
Interesting work 2 (77%) 5 (63%) 14%
Good boss 3 (75%) 1 (69%) 6%
Organization to be proud of 4 (74%) 7 (58%) 16%
Opportunity to advance 5 (73%) 1 (69%) 4%
Stability/security 6 (70%) 6 (62%) 8%
Creative/fun culture 7 (67%) 9 (50%) 17%
Compatible work group 8 (67%) 9 (50%) 17%
Work-life balance 9 (65%) 4 (65%) 0%
Opp. for accomplishment 10 (64%) 8 (53%) 11%
Note: where does “external factors” (e.g., spouse moved, school) rank as reasons employees quit? Managers: #1; Employees: #10
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What do we leave on the table?
• What do we leave on the table?• Engaged employees are:
– 130% more likely to excel at patient focus– 63% more likely to excel in communication– 26% more likely to maintain a safe work environment– 300% more likely to attract, hire and retain top talent– 70% more likely to reduce operational costs
(DDI, 2008 Driving Business Results)
• Replacing an employee is very expensive– For example: to replace 1 Nurse costs $50,000– At WPAHS, reducing nurse attrition by 1% saves
$1,700,000/year
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Dilbert gets it.
b. Compromised Leader:
Cracks under Pressure
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b. Compromised Leader: Cracks Under Pressure
• 1 of 8 feels pressure to compromise ethical standards.• About 1 of 3 employees observes misconduct at work.• 1 in 3 fears retaliation from report of ethical concerns.• Managers’ perceptions about ethical behaviors in their
organizations are consistently more positive than those of lower level employees.
• Virtually no differences in ethical perceptions among employees of government, for-profits and non-profits.
- Ethics Resource Center, Washington, D.C., 2000
• 43% of employees admitted to having engaged in at least one unethical act in the last year, and 75% observed such an act and did nothing about it.
- John Maxwell, Ethics 101, p. 10.
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In fact, the problem may be worse.
Survey of U.S. parents regarding teaching our children:
% of Parents who felt it was
ABSOLUTELY ESSENTIAL
% of Parent who felt they succeeded
To be HONEST & TRUTHFUL
91% 55%
To be COURTEOUS & POLITE
84% 62%
To have SELF-CONTROL & SELF-DISCIPLINE
83% 34%
Adapted from: A Lot Easier Said Than Done: Parents Talk About Raising Children in Today’s America , A Report from Public Agenda; Farkas/ Johnson/ Duffett/ Wilson/ Vine
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In a recent Wall Street Journal article, Psychology professor Steven Davis:
“Students say cheating in
high school is for grades,
cheating in college is for a career.”
Adapted from a presentation prepared by
L. Murphy Smith, Texas A&M University
c. Non-Trusted Leader:
Immediate Negative Reputation
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More Statistics
In 2002, in the wake of Enron, Worldcom and others, pollster George Barna asked people whether they had “COMPLETE CONFIDENCE” that leaders from various occupations would “consistently make . . . decisions that are morally appropriate.”
Here are the results:
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c. Non-trusted Leader: Immediate ReputationType of Leader % Who Hold Public’s
Complete Confidence
Execs of large corporations 3%
Elected government officials 3%
Film & TV producers, directors & writers
3%
News reporters / journalists 5%
Small business owners 8%
Ministers, priests, other clergy 11%
Teachers 14%Source: John C. Maxwell, Ethics 101
d. Disliked Leader
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People We Most Enjoy Being Around
1. Friends
2. Relatives
3. Significant Other
Kahneman, D., et al (2004). A Survey for Characterizing Daily Life Experience: The Day Reconstruction Method. Science. 306. 1776-80.
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People We Least Enjoy Being Around
• Third from last: Customers
• Second form last: Co-workers
• Dead last: Boss
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e. The Oblivious Leader
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a. Oblivious Leader: Art Imitates Life
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Let’s Sum Up
• Questions regarding ethics with:– Youth– Business operations– Public perception
• Question:– Is unethical behavior inevitable?
• Answer:– It’s up to you
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“I have now been sucked down the
inevitable vortex of becoming my father . . . .”
Des Spence, General Practitioner, Glasgow.
“Off the Dial.” British Medical Journal . 2008
Enough about the difficult ethics landscape
Let’s talk about what we can do
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eth·ics [eth-iks]
1. A system of moral principles: the ethics of a culture.
2. The rules of conduct recognized in respect to a particular class of human actions or a particular group, culture, etc.: medical ethics; Christian ethics.
3. Moral principles, as of an individual: His ethics forbade betrayal of a confidence.
4. (Usually used with a singular verb ) That branch of philosophy dealing with values relating to human conduct, with respect to the rightness and wrongness of certain actions and to the goodness and badness of the motives and ends of such actions.
www.dictionary.com
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Business
• Not long ago, “business” people bragged about ruthless capitalism.– Think about the 1980s, and 1990s– Think about the impact on Pittsburgh
• But today: business = value creation and trade.– Specifically, about creating value for stakeholders.
• At a minimum stakeholders include:– Customers, employees, suppliers, communities, and
well as shareholders or other financiers.
• Focus: patients and employees.
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Ethics
• Don’t miss the boat: “ethics” is NOT about religion or rainbows. Nor is ethics a moving target.
• Ethics always works at two levels: personal and interpersonal.
• Ethics is about the most important parts of our lives, and must be center stage—especially in turbulent times.
• A quick comparison: hurricane Andrew– Some people looted– Others drove to Florida to help
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The Role of Ethics and Values
• Ethics and values give us anchors, stakes in the ground.
• They serve as stabilizers and shields.• They empower and inspire us. They lead to
everyone pulling in the same direction.• In short values and ethics can drive business
strategy.R. Edward Freeman. Ethical Leadership in Turbulent Times. The Darden School. 2002.
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It’s not so important to play so many notes, as to mean the ones that you do play.
Warren Haynes, guitarist, Allman Brothers Band
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Real Problems With Values and Ethics
• We don’t always know our own values
• The problem of bad faith
• The problem of self deception
• Values, ethics and actionR. Edward Freeman. Ethical Leadership in Turbulent Times. The Darden School. 2002.
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The Amoral Leader
• Focuses on effectiveness.• Often focuses on personal power and the
position of leadership.• Is unconcerned about choices of the
followers.• Values don’t count. Ethics don’t count.
Just get the job done.• Very high human costs.
R. Edward Freeman. Ethical Leadership in Turbulent Times. The Darden School. 2002.
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The Bottom Line of Ethical Leadership
• The ethical leader considers all elements at once in searching for an outcome that considers the values and ethics of the leader, followers, and society as a whole.
• The ethical leader is inclusive, and seeks to include others and to minimize “us” vs. “them”.
• The ethical leader tries to get the right things done the right way, and fosters an open and honest “ethics/values” conversation in the organization.
R. Edward Freeman. Ethical Leadership in Turbulent Times. The Darden School. 2002.
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The Ethics and Values Conversation
• Focus on purpose not profits.• Relentlessness and consistency.• The importance of challenges to values and
ethics.• Make the conversation come alive.• Make the ethics and values drive the systems.• Make the ethics and values drive innovation and
change.
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Dimensions of Executive Ethical Leadership
Moral Person: Moral Manager: (leader’s behavior) (directs followers’ behavior)
- Traits - Role Modeling honesty, integrity, trust visible ethical action
- Behaviors - Rewards/Discipline
openness, concern for people, holds people accountable
personal morality for ethical conduct
- Decision-making - Communicating values-based, fair conveys an “ethics/values” message
Linda K. Trevino, Ph.D.. Smeal College of Business, The Pennsylvania State University. 2005
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Conclusions
• Executive ethical leadership is– Much more than traits (e.g., integrity)
• Think about ENRON
– Requires great care to create and sustain an ethical culture that sends a consistent message that is at least as powerful as the “bottom line” drumbeat (via real attention to ethics in multiple cultural systems).
Let’s get more specific
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1. Choose the right people
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Hiring
• Southwest Airlines– “Culture” is the “glue that holds Southwest together”– Completely values driven– What results?
• 34 years of profits• Highest value/lowest debt• Highest retention, but not highest wages• Highest performance• Highly unionized, but never a strike
– Indeed, union pilots regularly load/unload baggage
• Never a layoff
• During that period, what happened to PanAm, TWA, USAir, etc.?
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What is SouthWest’s “Secret Sauce”?
• Be meticulous
• Hire ONLY “A” players
• Never compromise on a “B” or “C” player– Better to leave the position vacant– Why?
• Devote the necessary effort and energy– Average of 25 interviews for 1 job opening
• Hire for “Values”45
Never Slack Off
• 50% spend less than 30 minutes conferring with other interviewers– Often less than 10 minutes– We devote more time to a single episode of
The Office or 30 Rock than to deciding who we will work with for the next 5 years
• 24-79% don’t know it is unlawful to ask about ethnicity, age, marital status, disability
DDI, Discover the New Targeted Selection, 10/20/09
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Don’t Fall Into the Trap
• How do interviewers prepare for conducting interviews?– Informal OTJ training 48%– Instinct 44%– Attended class with skills practice 27%– Attended a class 27%– Read a book 18%– None 16%– Online course 7%
DDI, Are You Failing the Interview, 2009
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It ain’t what you don’t know thatgets you in trouble. It’s what youknow for sure that just ain’t so.
Mark Twain
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2. Base decisions on values.
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The Proposition
• Organizations that identify and embrace a set of values – and bake those values into all actions – out perform their competitors.
• Why:– Leaders cultivate values– Values establish acceptable Behaviors– Behaviors establish culture– Culture demands performance
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For Example: HealthcareEach Focused on Values
• Bronson Methodist Hospital– Since 2001, highest overall patient
satisfaction (regional)
• Baptist Hospital, Inc.– Since 1998, 99th %ile (Press Ganey) in- and
out-patient satisfaction in key areas
• Robert Wood Johnson– Market share growth: cardiology from 20 to
30%, surgery 17 to 30%, oncology 13-30%
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How to Foster Ethics at Work
Continuously publish your values Emphasize top management’s
commitment to values. Publish an ethics code – and USE it. Establish compliance mechanisms.
Involve personnel at all levels. Train employees. Measure results – “live” the ethics.
G.Dessler, 2003
How to Foster Ethics at Work
Include “values assessment” in . . . On-boarding Orientation 90-day assessment Annual assessments
Identify candidates’ values during the interviewing process
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Make EveryoneResponsible for Hiring
• Result:– New hires will share your values– Most effective “culture” changer– Immediate “value-add”
• To managers and the organization– Enables you to focus on the real issues
• Good-bye “80-20” rule
• Retirement tsunami– Not just nurses and physicians– Baby boom: 1946-1962 (“boomers” turn 64 this year)– What does that mean to your unit? The hospital? The
patients?
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We decided that we’d be willing
to change absolutely everything,
except our principles.
Chris Galvin, CEO, Motorola
3. Provide constant feedback
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Employee Feedback
• Traditional method– Once each year– Managers hate it– Employees believe it is unfair– Frequent surprises– In reality: it is a legal exercise
• Better method– Quarterly, if not monthly– Builds “A” players; helps remove less than “A”
players
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4. Engage your staff
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• What is the #1 desire of employees?
• How does that desire relate to ethics?
• By the way, employees can get the job done.
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• Set of things to do, at a minimum– Give employees real voice
• Not just party planning• Unit councils, charged with meaningful tasks
– Do so in a meaningful, regular manner• If not scheduled, it will not happen• Examples:
– Project team– Patient satisfaction team– Solution team (GM, NY: ↑ productivity; ↓ grievances)
• Develop a charter
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• Hospital Case Study– FY 08 (July 07): regularly missed budgeted volumes
resulting from patient flow process– Specifically: in 4th Q FY07 /1st Q FY 08:
– Diverting over 50 patients a month– ED in Code Red over 100 hours a month– LOS for Admitted patients in ED > 11 hours
– Plan A: hire 20 nurses and more support staff– $1.1 million– Continuation of non-efficient process
– Plan B: Immediate plan of correction:– Design an optimal patient flow process
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• Results– Code Red Reduction/Elimination
• In 2 months, code red hours decreased to 50 from 160hours
• In 3 months, to “0” (first time in 5+ years)
– LOS for admitted patients in ED• July ‘07: 11.48 hours
• April ‘08: 5.69 hours
• FY ‘08: 7.18 hours
• FY ‘09: 6.14 hours
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Hours Code Red
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4.5
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125
80
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168
86
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Hour
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Series1
Linear (Series1)
How to Practice Ethical Leadership1. Model the Way
• All eyes are on you• Garbage in = garbage out
2. Inspire a Shared Vision• Define the future, align people with that vision, and inspire them – despite the
obstacles
3. Challenge the Process• Maintaining the status quo – at times very important --is a clerical job
4. Enable Others to Act• Know the “80-20” rule
5. Encourage the Heart• Employees will show up without your guidance• Excellence comes from employees’ giving more than their labor• Think about employees’ motivations
Kouzes and Posner
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Practices that Build Culture
• Selecting the right people• Orienting them to your organization
strategy and culture• Developing business literacy that
integrates the ethics perspective• Organizational communication• Situational leadership• Performance management• Training and development• Reward systems
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Can we teach ethics?
To educate a person in mind
and not in morals is to educate
a menace to society.
Teddy Roosevelt
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Discussion
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