MGMT3102 Chap.11 Ethical Culture and Ethical Leadership
Ethical Culture and Ethical Leadership
Week 7 pairs the start of the simulation with ethics and organisational culture. This chapter begins with a familiar scenario: repeated misconduct, dismissals and a new code of ethics.
Treviño and Brown's five myths about managing ethics explain why that response often fails, and the seminar's model of culture as formal systems plus informal signals shows what else has to change.
The chapter then sets out Brown and Treviño's account of ethical leadership as the combination of a moral person and a moral manager, the social learning and social exchange mechanisms through which followers are influenced, the antecedents and outcomes they propose, and the risk of ethically neutral leadership.
It links these ideas to stakeholder management and to the governance decisions in the simulation.
What this chapter covers
- 01
Five myths about managing ethics
- 02
Formal systems and informal signals
- 03
Ethical culture as consistent signals
- 04
Moral person and moral manager
- 05
Social learning and vicarious learning
- 06
Ethically neutral leadership and hypocrisy
Worked example · free
Diagnosing repeated safety shortcuts in a warehouse
- +1Myth. The response treats the problem as bad apples and assumes a code is enough, two of Treviño and Brown's myths.
- +1Formal systems. The new code conflicts with a performance system that rewards speed.
- +1Informal signals. Weekly praise for the fastest team tells staff that speed matters more than safety.
- +1Implication. Through social learning, staff copy what is rewarded, so breaches are likely to continue unless incentives and recognition change.
Key terms
- Ethical culture
- An organisation's condition when its formal systems and informal signals send consistent messages about ethical conduct.
- Moral person
- The side of ethical leadership concerned with a leader's own honesty, fairness, care and principles.
- Moral manager
- The side of ethical leadership concerned with actively shaping followers' conduct through communication, role modelling and rewards and discipline.
- Vicarious learning
- Learning what is acceptable by observing how others are rewarded or disciplined.
- Ethically neutral leadership
- Leadership with no evident misconduct but no proactive ethics agenda, which leaves conduct to chance.
Ethical Culture and Ethical Leadership FAQ
Why isn't dismissing wrongdoers and issuing a code enough?
Because misconduct reflects context as well as individuals. Treviño and Brown list 'it's just bad apples' and 'a code is enough' among five myths. If incentives, peer norms and leaders' signals still reward the old behaviour, new staff learn it again and the code becomes paper.
What is the difference between a moral person and a moral manager?
A moral person is honest, fair, caring and principled in their own conduct. A moral manager actively promotes ethical conduct in others by talking about ethics, modelling it visibly and using rewards and discipline. Brown and Treviño argue that ethical leadership needs both.
How do leaders influence followers' ethics?
Mainly through social learning: followers imitate credible, attractive role models and learn what is acceptable by watching who is rewarded or punished. Social exchange adds a second route, in which fair and caring treatment creates a sense of obligation that followers repay with good conduct.
What is ethically neutral leadership?
Brown and Treviño use the term for leaders who commit no misconduct but have no ethics agenda. Low ethical leadership is not the same as high unethical leadership, yet neutral leaders send no clear signal, so the culture is shaped by incentives and peers instead.
What makes ethical leadership more likely?
Brown and Treviño propose that having an ethical role model and working in an ethical context help, as do agreeableness, conscientiousness and stronger moral reasoning, while Machiavellianism works against it. They also suggest that the moral intensity of an issue affects whether ethical leadership shows.
Exam move
Learn the five myths as a checklist for any ethics case, and practise mapping a scenario onto formal systems and informal signals in two columns. Then write one paragraph diagnosing a leader as a moral person, a moral manager, both or neither, naming what they reward and what followers are likely to learn. Name one formal and one informal change in every ethics recommendation you write.
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