CHAPTER 5
Values, Ethics, and Character
Introduction
In Chapter 4 we examined many facets of power and its use in leadership. Leaders can use power for good
or ill, and a leader’s personal values and ethical code may be among the most important determinants of
how that leader exercises the various sources of power available. That this aspect of leadership needs closer
scrutiny seems evident enough in the face of the past decade’s wave of scandals involving political, busi-
ness, and even religious leaders who collectively rocked trust in both our leaders and our institutions. Even
in purely economic terms, in 2010 the Association of Certified Fraud Examiners estimated that businesses
around the world lose $2.9 billion every year to fraudulent activity.1 Further, in the 2016 presidential election
one party’s nominee consistently referred to his opponent as “Crooked Hillary” while his own character and
ethics were themselves questioned throughout the election—and continue to be. In the face of this distressing
situation, it is not surprising that scholarly and popular literature have turned greater attention to the ques-
tion of ethical leadership.2
Leadership and “Doing the Right Things”
In Chapter 1 we referred to a distinction between leaders and managers that says leaders do the right things
whereas managers do things right. But what are the “right things”? Are they the morally right things? The
ethically right things? The right things for the company to be successful? And who says what the right things
are?
Leaders face dilemmas that require choices between competing sets of values and priorities, and the best lead-
ers recognize and face them with a commitment to doing what is right, not just what is expedient. Of course,
the phrase doing what is right sounds deceptively simple. Sometimes it takes great moral courage to do what
is right, even when the right action seems clear. At other times, though, leaders face complex challenges that
lack simple black-and-white answers. Whichever the case, leaders set a moral example to others that becomes
the model for an entire group or organization, for good or bad. Leaders who themselves do not honor truth
do not inspire it in others. Leaders concerned mostly with their own advancement do not inspire selflessness
in others. Leaders should internalize a strong set of ethics—principles of right conduct or a system of moral
values.
Leadership cannot just go along to get along. . . . Leadership must meet the moral challenge of the day.
Jesse Jackson, American civil rights activist
hug82978_ch05_135-166.pdf November 17, 2020
, 136 CHAPTER 5: Values, Ethics, and Character
Both Gardner and Burns have stressed the centrality and importance of the moral dimension of leadership.3,
4 Gardner said leaders ultimately must be judged on the basis of a framework of values, not just in terms of
their effectiveness. He put the question of a leader’s relations with his or her followers or constituents on the
moral plane, arguing (with the philosopher Immanuel Kant) that leaders should always treat others as ends
in themselves, not as objects or mere means to the leader’s ends (which does not necessarily imply that lead-
ers need to be gentle in interpersonal demeanor or “democratic” in style). Burns took an even more extreme
view regarding the moral dimension of leadership, maintaining that leaders who do not behave ethically do
not demonstrate true leadership.
Whatever “true leadership” means, most people would agree that at a minimum it is characterized by a high
degree of trust between leader and followers. Bennis and Goldsmith described four qualities of leadership
that engender trust: vision, empathy, consistency, and integrity.5 First, we tend to trust leaders who create
a compelling vision: who pull people together on the basis of shared beliefs and a common sense of orga-
nizational purpose and belonging. Second, we tend to trust leaders who demonstrate empathy with us—who
show they understand the world as we see and experience it. Third, we trust leaders who are consistent. This
does not mean that we only trust leaders whose positions never change, but that changes are understood as
a process of evolution in light of relevant new evidence. Fourth, we tend to trust leaders whose integrity is
strong, who demonstrate their commitment to higher principles through their actions.
Another important factor affecting the degree of trust between leaders and followers involves fundamental
assumptions people make about human nature. Several decades ago Douglas McGregor explained different
styles of managerial behavior on the basis of people’s implicit attitudes about human nature, and his work
remains quite influential today.6 McGregor identified two contrasting sets of assumptions people make about
human nature, calling these Theory X and Theory Y.
In the simplest sense, Theory X reflects a more pessimistic view of others. Managers with this orientation
rely heavily on coercive, external control methods to motivate workers, such as pay, disciplinary techniques,
punishments, and threats. They assume people are not naturally industrious or motivated to work. Hence it is
the manager’s job to minimize the harmful effects of workers’ natural laziness and irresponsibility by closely
overseeing their work and creating external incentives to do well and disincentives to avoid slacking off. The-
ory Y, by contrast, reflects a view that most people are intrinsically motivated by their work. Rather than
needing to be coaxed or coerced to work productively, such people value a sense of achievement, personal
growth, pride in contributing to their organization, and respect for a job well done. Peter Jackson, director of
the Lord of the Rings film trilogy, seems to exemplify a Theory Y view of human nature. When asked, “How
do you stand up to executives?” Jackson answered, “Well, I just find that most people appreciate honesty. I
find that if you try not to have any pretensions and you tell the truth, you talk to them and you treat them as
collaborators, I find that studio people are usually very supportive.”
There is nothing so fast as the speed of trust.
Stephen Covey, American author and educator
But are there practical advantages to holding a Theory X or Theory Y view? Evidently there are. There is
evidence that success more frequently comes to leaders who share a positive view of human nature. Hall and
Donnell reported findings of five separate studies involving over 12,000 managers that explored the relation-
ship between managerial achievement and attitudes toward subordinates.7 Overall, they found that managers
who strongly subscribed to Theory X beliefs were far more likely to be in their lower-achieving group.
The dilemma, of course, is that for the most part both Theory X and Theory Y leaders would say they have
the right beliefs and are doing the right things. This begs the question of what people generally mean by
“right,” which in turn raises an array of issues involving ethics, values, moral reasoning, and the influence
they have on our behavior.
hug82978_ch05_135-166.pdf November 17, 2020
, CHAPTER 5: Values, Ethics, and Character 137
Values
Values are “constructs representing generalized behaviors or states of affairs that are considered by the indi-
vidual to be important.”8 When Patrick Henry said, “Give me liberty, or give me death,” he was expressing
the value he placed on political freedom. The opportunity to continually study and learn may be the fun-
damental value or “state of affairs” leading a person to pursue a career in academia. Someone who values
personal integrity may be forced to resign from an unethical company. Values are learned through the social-
ization process, and they become internalized and for most people represent integral components of the self.9
Thus values play a central role in one’s overall psychological makeup and can affect behavior in a variety of
situations. In work settings, values can affect decisions about joining an organization, organizational commit-
ment, relationships with coworkers, and decisions about leaving an organization.10 It is important for leaders
to realize that individuals in the same work unit can have considerably different values, especially because we
cannot see values directly. We can only make inferences about people’s values based on their behavior. An
interesting perspective on the importance of the consistency between one’s behavior and their values can be
seen in Highlight 5.1.
On the Danger of Making Small Compromises to
Your Values
HIGHLIGHT 5.1 dents that because of deep religious convictions,
he’d made a firm commitment never to play on
What do you think? Is it easier to stick to your a Sunday. At the time, his coach and teammates
values 100 percent of the time or 98 percent were incredulous; after all, it would be an excep-
of the time? That is a question Professor Clay tion, “just this once.” What difference would it
Christensen (an expert in business innovation) really make? Christensen stood by his princi-
posed to his students at Harvard in an end-of- ples, though, and did not play in the champi-
semester lecture requested by them. The stu- onship game.
dents wanted to know whether and how the
The point he was making to his Harvard stu-
business principles he taught in class applied to
dents was that, as counterintuitive as it might
their personal lives.
seem, it is easier to stick to your values 100 per-
One of the personal stories Christensen shared cent of the time than it is to stick to them 98
in the lecture occurred when he played on the percent of the time. Christensen explained that,
Oxford University basketball team. It was a tempting as it might be to make an exception
good team, and it had been a very successful “just this once” because of extenuating circum-
year. They were going to play in the British stances, “you’ve got to define for yourself what
equivalent of the NCAA tournament, and they you stand for and draw the line in a safe place.”
made it to the final four. When Christensen Source: C. M. Christensen, “How Will You Measure Your
saw the tourney schedule, however, he was cha- Life? Don’t Reserve Your Best Business Thinking for Your
grined: Their championship game would be Career,” Harvard Business Review, July/August 2010: 46–51.
played on a Sunday. Christensen told his stu-
Table 5.1 lists some of the major values that may be considered important by individuals in an organization.
The instrumental values found in the table refer to modes of behavior, and the terminal values refer to desired
end states.11 For example, some individuals value equality, freedom, and a comfortable life above all else; oth-
ers may believe that family security and salvation are important goals. In terms of instrumental values, such
hug82978_ch05_135-166.pdf November 17, 2020
, 138 CHAPTER 5: Values, Ethics, and Character
individuals may think it is important always to act in an ambitious, capable, and honest manner, whereas oth-
ers may think it is important only to be ambitious and capable. The point to keep in mind here is not just that
different people often have different values. It is that their different values sometimes lead them to behave very
differently. Consider, for example, whether someone decides to share with others (for example, the boss) a
challenging but potentially constructive opinion about the organization. Whether the person speaks up or not
depends, in part, on her values. If “sense of duty” were more important to the person than “getting ahead,”
then she would be more likely to speak up than if the reverse were true.12
TABLE 5.1 People Vary in the Relative Importance They Place on Values
Terminal Values Instrumental Values
An exciting life Being courageous
A sense of accomplishment Being helpful
Family security Being honest
Inner harmony Being imaginative
Social recognition Being logical
Friendship Being responsible
Source: Adapted from M. Rokeach, The Nature of Human Values (New York: Free Press, 1973).
Glass, china, and reputation are easily crack’d, and never well mended.
Benjamin Franklin
Various researchers have said that the pervasive influence of broad forces like major historical events and
trends, technological changes, and economic conditions tends to create common value systems among peo-
ple growing up at a particular time that distinguish them from people who grow up at different times.13, 14,
15 They attribute much of the misunderstanding that may exist between older leaders and younger followers
to the fact that their basic value systems were formulated during different social and cultural conditions, and
these analyses offer a helpful perspective for understanding how differences in values can add tension to the
interaction between some leaders and followers.
Zemke is another researcher who has looked at differences in values across generations and how those value
differences affect their approaches to work and leadership.16 Following is his delineation of four generations
of workers, each molded by distinctive experiences during critical developmental periods:
The Veterans (1922–1943): Veterans came of age during the Great Depression and World War II, and
they represent a wealth of lore and wisdom. They’ve been a stabilizing force in organizations for
decades, even if they are prone to digressions about “the good old days.”
The Baby Boomers (1942–1960): These were the postwar babies who came of age during violent social
protests, experimentation with new lifestyles, and pervasive questioning of establishment values. But
they’re graying now, and they don’t like to think of themselves as “the problem” in the workplace even
though they sometimes are. Boomers still have passion about bringing participation, spirit, heart, and
humanity to the workplace and office. They’re also concerned about creating a level playing field for all,
but they hold far too many meetings for the typical Gen Xer. As the Boomers enter their retirement
years, they take with them a work ethic characterized by ambition, an achievement orientation, and
organizational loyalty.17
hug82978_ch05_135-166.pdf November 17, 2020
Values, Ethics, and Character
Introduction
In Chapter 4 we examined many facets of power and its use in leadership. Leaders can use power for good
or ill, and a leader’s personal values and ethical code may be among the most important determinants of
how that leader exercises the various sources of power available. That this aspect of leadership needs closer
scrutiny seems evident enough in the face of the past decade’s wave of scandals involving political, busi-
ness, and even religious leaders who collectively rocked trust in both our leaders and our institutions. Even
in purely economic terms, in 2010 the Association of Certified Fraud Examiners estimated that businesses
around the world lose $2.9 billion every year to fraudulent activity.1 Further, in the 2016 presidential election
one party’s nominee consistently referred to his opponent as “Crooked Hillary” while his own character and
ethics were themselves questioned throughout the election—and continue to be. In the face of this distressing
situation, it is not surprising that scholarly and popular literature have turned greater attention to the ques-
tion of ethical leadership.2
Leadership and “Doing the Right Things”
In Chapter 1 we referred to a distinction between leaders and managers that says leaders do the right things
whereas managers do things right. But what are the “right things”? Are they the morally right things? The
ethically right things? The right things for the company to be successful? And who says what the right things
are?
Leaders face dilemmas that require choices between competing sets of values and priorities, and the best lead-
ers recognize and face them with a commitment to doing what is right, not just what is expedient. Of course,
the phrase doing what is right sounds deceptively simple. Sometimes it takes great moral courage to do what
is right, even when the right action seems clear. At other times, though, leaders face complex challenges that
lack simple black-and-white answers. Whichever the case, leaders set a moral example to others that becomes
the model for an entire group or organization, for good or bad. Leaders who themselves do not honor truth
do not inspire it in others. Leaders concerned mostly with their own advancement do not inspire selflessness
in others. Leaders should internalize a strong set of ethics—principles of right conduct or a system of moral
values.
Leadership cannot just go along to get along. . . . Leadership must meet the moral challenge of the day.
Jesse Jackson, American civil rights activist
hug82978_ch05_135-166.pdf November 17, 2020
, 136 CHAPTER 5: Values, Ethics, and Character
Both Gardner and Burns have stressed the centrality and importance of the moral dimension of leadership.3,
4 Gardner said leaders ultimately must be judged on the basis of a framework of values, not just in terms of
their effectiveness. He put the question of a leader’s relations with his or her followers or constituents on the
moral plane, arguing (with the philosopher Immanuel Kant) that leaders should always treat others as ends
in themselves, not as objects or mere means to the leader’s ends (which does not necessarily imply that lead-
ers need to be gentle in interpersonal demeanor or “democratic” in style). Burns took an even more extreme
view regarding the moral dimension of leadership, maintaining that leaders who do not behave ethically do
not demonstrate true leadership.
Whatever “true leadership” means, most people would agree that at a minimum it is characterized by a high
degree of trust between leader and followers. Bennis and Goldsmith described four qualities of leadership
that engender trust: vision, empathy, consistency, and integrity.5 First, we tend to trust leaders who create
a compelling vision: who pull people together on the basis of shared beliefs and a common sense of orga-
nizational purpose and belonging. Second, we tend to trust leaders who demonstrate empathy with us—who
show they understand the world as we see and experience it. Third, we trust leaders who are consistent. This
does not mean that we only trust leaders whose positions never change, but that changes are understood as
a process of evolution in light of relevant new evidence. Fourth, we tend to trust leaders whose integrity is
strong, who demonstrate their commitment to higher principles through their actions.
Another important factor affecting the degree of trust between leaders and followers involves fundamental
assumptions people make about human nature. Several decades ago Douglas McGregor explained different
styles of managerial behavior on the basis of people’s implicit attitudes about human nature, and his work
remains quite influential today.6 McGregor identified two contrasting sets of assumptions people make about
human nature, calling these Theory X and Theory Y.
In the simplest sense, Theory X reflects a more pessimistic view of others. Managers with this orientation
rely heavily on coercive, external control methods to motivate workers, such as pay, disciplinary techniques,
punishments, and threats. They assume people are not naturally industrious or motivated to work. Hence it is
the manager’s job to minimize the harmful effects of workers’ natural laziness and irresponsibility by closely
overseeing their work and creating external incentives to do well and disincentives to avoid slacking off. The-
ory Y, by contrast, reflects a view that most people are intrinsically motivated by their work. Rather than
needing to be coaxed or coerced to work productively, such people value a sense of achievement, personal
growth, pride in contributing to their organization, and respect for a job well done. Peter Jackson, director of
the Lord of the Rings film trilogy, seems to exemplify a Theory Y view of human nature. When asked, “How
do you stand up to executives?” Jackson answered, “Well, I just find that most people appreciate honesty. I
find that if you try not to have any pretensions and you tell the truth, you talk to them and you treat them as
collaborators, I find that studio people are usually very supportive.”
There is nothing so fast as the speed of trust.
Stephen Covey, American author and educator
But are there practical advantages to holding a Theory X or Theory Y view? Evidently there are. There is
evidence that success more frequently comes to leaders who share a positive view of human nature. Hall and
Donnell reported findings of five separate studies involving over 12,000 managers that explored the relation-
ship between managerial achievement and attitudes toward subordinates.7 Overall, they found that managers
who strongly subscribed to Theory X beliefs were far more likely to be in their lower-achieving group.
The dilemma, of course, is that for the most part both Theory X and Theory Y leaders would say they have
the right beliefs and are doing the right things. This begs the question of what people generally mean by
“right,” which in turn raises an array of issues involving ethics, values, moral reasoning, and the influence
they have on our behavior.
hug82978_ch05_135-166.pdf November 17, 2020
, CHAPTER 5: Values, Ethics, and Character 137
Values
Values are “constructs representing generalized behaviors or states of affairs that are considered by the indi-
vidual to be important.”8 When Patrick Henry said, “Give me liberty, or give me death,” he was expressing
the value he placed on political freedom. The opportunity to continually study and learn may be the fun-
damental value or “state of affairs” leading a person to pursue a career in academia. Someone who values
personal integrity may be forced to resign from an unethical company. Values are learned through the social-
ization process, and they become internalized and for most people represent integral components of the self.9
Thus values play a central role in one’s overall psychological makeup and can affect behavior in a variety of
situations. In work settings, values can affect decisions about joining an organization, organizational commit-
ment, relationships with coworkers, and decisions about leaving an organization.10 It is important for leaders
to realize that individuals in the same work unit can have considerably different values, especially because we
cannot see values directly. We can only make inferences about people’s values based on their behavior. An
interesting perspective on the importance of the consistency between one’s behavior and their values can be
seen in Highlight 5.1.
On the Danger of Making Small Compromises to
Your Values
HIGHLIGHT 5.1 dents that because of deep religious convictions,
he’d made a firm commitment never to play on
What do you think? Is it easier to stick to your a Sunday. At the time, his coach and teammates
values 100 percent of the time or 98 percent were incredulous; after all, it would be an excep-
of the time? That is a question Professor Clay tion, “just this once.” What difference would it
Christensen (an expert in business innovation) really make? Christensen stood by his princi-
posed to his students at Harvard in an end-of- ples, though, and did not play in the champi-
semester lecture requested by them. The stu- onship game.
dents wanted to know whether and how the
The point he was making to his Harvard stu-
business principles he taught in class applied to
dents was that, as counterintuitive as it might
their personal lives.
seem, it is easier to stick to your values 100 per-
One of the personal stories Christensen shared cent of the time than it is to stick to them 98
in the lecture occurred when he played on the percent of the time. Christensen explained that,
Oxford University basketball team. It was a tempting as it might be to make an exception
good team, and it had been a very successful “just this once” because of extenuating circum-
year. They were going to play in the British stances, “you’ve got to define for yourself what
equivalent of the NCAA tournament, and they you stand for and draw the line in a safe place.”
made it to the final four. When Christensen Source: C. M. Christensen, “How Will You Measure Your
saw the tourney schedule, however, he was cha- Life? Don’t Reserve Your Best Business Thinking for Your
grined: Their championship game would be Career,” Harvard Business Review, July/August 2010: 46–51.
played on a Sunday. Christensen told his stu-
Table 5.1 lists some of the major values that may be considered important by individuals in an organization.
The instrumental values found in the table refer to modes of behavior, and the terminal values refer to desired
end states.11 For example, some individuals value equality, freedom, and a comfortable life above all else; oth-
ers may believe that family security and salvation are important goals. In terms of instrumental values, such
hug82978_ch05_135-166.pdf November 17, 2020
, 138 CHAPTER 5: Values, Ethics, and Character
individuals may think it is important always to act in an ambitious, capable, and honest manner, whereas oth-
ers may think it is important only to be ambitious and capable. The point to keep in mind here is not just that
different people often have different values. It is that their different values sometimes lead them to behave very
differently. Consider, for example, whether someone decides to share with others (for example, the boss) a
challenging but potentially constructive opinion about the organization. Whether the person speaks up or not
depends, in part, on her values. If “sense of duty” were more important to the person than “getting ahead,”
then she would be more likely to speak up than if the reverse were true.12
TABLE 5.1 People Vary in the Relative Importance They Place on Values
Terminal Values Instrumental Values
An exciting life Being courageous
A sense of accomplishment Being helpful
Family security Being honest
Inner harmony Being imaginative
Social recognition Being logical
Friendship Being responsible
Source: Adapted from M. Rokeach, The Nature of Human Values (New York: Free Press, 1973).
Glass, china, and reputation are easily crack’d, and never well mended.
Benjamin Franklin
Various researchers have said that the pervasive influence of broad forces like major historical events and
trends, technological changes, and economic conditions tends to create common value systems among peo-
ple growing up at a particular time that distinguish them from people who grow up at different times.13, 14,
15 They attribute much of the misunderstanding that may exist between older leaders and younger followers
to the fact that their basic value systems were formulated during different social and cultural conditions, and
these analyses offer a helpful perspective for understanding how differences in values can add tension to the
interaction between some leaders and followers.
Zemke is another researcher who has looked at differences in values across generations and how those value
differences affect their approaches to work and leadership.16 Following is his delineation of four generations
of workers, each molded by distinctive experiences during critical developmental periods:
The Veterans (1922–1943): Veterans came of age during the Great Depression and World War II, and
they represent a wealth of lore and wisdom. They’ve been a stabilizing force in organizations for
decades, even if they are prone to digressions about “the good old days.”
The Baby Boomers (1942–1960): These were the postwar babies who came of age during violent social
protests, experimentation with new lifestyles, and pervasive questioning of establishment values. But
they’re graying now, and they don’t like to think of themselves as “the problem” in the workplace even
though they sometimes are. Boomers still have passion about bringing participation, spirit, heart, and
humanity to the workplace and office. They’re also concerned about creating a level playing field for all,
but they hold far too many meetings for the typical Gen Xer. As the Boomers enter their retirement
years, they take with them a work ethic characterized by ambition, an achievement orientation, and
organizational loyalty.17
hug82978_ch05_135-166.pdf November 17, 2020
