Ethical Leadership

Summary:

1. Introduction: Associate Professor James Michael Haley
   1. Paul Hennigan – President. Point Park University
   2. John Krause – VP Corporate Governance, Compliance, and Ethics, H.J. Heinz Company
2. Heinz Company
   1. Promotes ethic standards through the ethics and compliance global departments using communication, training and mentoring
      1. Communication – constantly pulse out a message so that Heinz employees know how important ethics compliance are to the company
         1. Example: Quarterly in-house newsletter sent to all employees that provides active examples of how to handle ethics issues at Heinz.
      2. Education Programs: Online training tool for ethics and compliance for all salaried employees with a computer and in person training sessions to all levels of the global organization starting with top line executives at all locations.
         1. In Person training allows all employees to hear the training from us and ask questions and to engage in dialogue that helps drive the message home in each location.
3. Paul Hennigen, Point Park University
   1. Ethical leadership concept based on transparency and honesty, integrity (do what you say, say what you mean), developing a sense of trust throughout the university.
   2. If members of the community trust the leader then they are more likely to follow the leader and pursue the organizations over all goals and vision.
4. Krause
   1. We can improve ethics as business leaders by taking about it.
   2. They are not difficult conceptual ideas.
   3. Examples of ethical failures.
      1. Enron had a 40/50 page code of conduct that no one read, discussed or put it into practice.
      2. Bernie Madoff ponzi scheme: In addition to Madoff fraud included federal regulators, compliant accountants, and careless investment managers.
   4. We all have codes of conduct and policies and procedures.
   5. We need to make sure our employees know how important it is to our shareholders, employees and the company that we follow these rules and regulations.
   6. We need to talk about them regularly so that people remember they are important.
5. Hennigen
   1. Discussing issues and decisions in group sessions I find that it forces a higher level of honesty and transparency.
   2. Lapses in leadership over the years.
   3. Common theme: Decisions were made behind closed doors, made by individuals or small groups, that were clearly trying to hide something.
6. Krause
   1. Teaching business ethics can help encourage ethical conduct.
   2. By letting employees know how important it is to the overall operation of the company’s reputation in the marketplace.
   3. Understanding of ethics varies with each individual and we should not assume that new business leaders coming out of college have a fully developed sense of ethics.
7. Ethical Leader Example: Roy Disney
   1. Made Disney profitable by making managers accountable.
   2. Hired Eisner but eventually wanted to replace him because he lacked the vision to lead the company.
   3. Big concern was Eisner’s inability to develop relationships with creative partners such as Pixar.
   4. Roy resigned and pointed out in his resignation letter his concerns about Eisner and for Eisner to resign as well.
   5. Roy rallied 45% of shareholders to a no-confidence vote on Eisner’s ability to run the company properly.
   6. This led the board to remove Eisner as Chairman and ultimately replace him with a new CEO, Bob Either, who repaired the relationship with Pixar which lead to a merger.
   7. Students who study this example will help them understand the necessary values to be an ethical business leader.
8. Point Park Student
   1. Teaching ethics will create a new generation of business leaders that understand ethics in a different way.
   2. They understand what really needs to happen in an organization.
   3. Learning about ethical leadership will change the corporate structure.
   4. Example: Pittsburgh Zoo
      1. Traditional top down multi-level organization which is not friendly in the ethical business sense.
      2. Dr. Baker took control of the zoo, privatized it and flattened the organization structure that bought all departments to the table..
      3. Employees now feel they have a voice in the operation of the organization.
9. Krause
   1. A great time for an ethics business leader to make real changes in the business and business world.
10. Hennigen
    1. Often asked by the faculty how to teach ethics in their own way and Hennigen suggests that it be included in all courses.
    2. It is appropriate in all courses to have a discussion of ethical behavior, honesty and transparency.
11. Krause
    1. An exciting area to study right now.
    2. It takes a lot of moral courage to step out and say something is not right.