Kniha: Ethical Leadership in Slovak Business Environment - Anna Remišová; Anna Lašáková; Ján Rudy; Rozália Sulíková; Zuzana Kirchmayer; .. .

CONTENTS

INTRODUCTION.............................................................................................................7

1 THEORETICAL BASIS................................................................................................9

1.1. Terms.ethical.and.moral.......................................................................................9

1.2.. Morale.................................................................................................................... 10

1.3. Ethics...................................................................................................................... 12

1.4. Leadership............................................................................................................. 14

1.5. Ethical.leadership.................................................................................................. 16

1.6. Unethical.leadership............................................................................................. 18

1.7. Managerial.decision-making................................................................................. 20

1.8. Ethical.managerial.decision-making.................................................................... 23

1.9. Organisational.culture.......................................................................................... 25

1.10. Ethics.programme.of.organisation....................................................................... 27

2 RESEARCH METHODOLOGY................................................................................... 30

2.1. Research.methods................................................................................................. 33

2.2. Methods.of.research.results.analysis.................................................................... 40

2.3. Characteristics.of.research.sample....................................................................... 41

2.4. Characteristics.of.business.environment.in.Slovakia.......................................... 50

3 RESEARCH RESULTS ................................................................................................ 60

3.1. Ethical.leadership.in.Slovak.business.environment............................................ 60

3.1.1. Theoretical.basis.of.ethical.leadership...................................................... 60

3.1.2. Ethical.leadership.in.Slovakia.–.results.analysis........................................ 65

3.1.3. Discussion.on.research.results.of.ethical.leadership.in.Slovakia............. 68

3.1.4. Summary.of.the.most.important.research.results.of.ethical..

leadership.in.Slovakia................................................................................. 69

3.1.5. Recommendations.resulting.from.research.results.................................. 70

3.2. Organisational.factors.influencing.the.development.of.ethical.leadership...... 72

3.2.1. Theoretical.basis.of.organisational.factors.influencing.ethical..

leadership.in.organisation.......................................................................... 72

3.2.2. Research.results.analysis.of.organisational.factors.enhancing.ethical.

leadership.development.in.organisation................................................... 75

3.2.2.1. Discussion.on.research.results.of.organisational.factors.

enhancing.ethical.leadership.development.in.organisation....... 76

3.2.3. Summary.of.the.most.important.research.results.of.organizational.

factors.enhancing.ethical.leadership.development.in.organisation........ 81

3.2.4. Recommendations.resulting.from.the.most.important.research..

results.of.organisational.factors.enhancing.the.ethical.leadership.

development.in.organisation..................................................................... 81

3.3. Causes.and.manifestations.of.unethical.behaviour.in.Slovakia......................... 83

3.3.1. Theoretical.basis.of.unethical.leadership.................................................. 83

3.3.2. Research.results.of.manifestations.and.causes.of.unethical..

leadership.in.Slovakia................................................................................. 92

3.4. Managerial.decision-making.in.the.context.of.business.ethics..........................104

3.4.1. Theoretical.basis.of.managerial.decision-making.....................................105

3.4.2. Managerial.decision-making.–.analysis.of.research.results......................107

3.4.3. Discussion.on.research.results.of.managerial.decision-making..

in.the.context.of.business.ethics................................................................113

3.4.4. Summary.of.research.results.of.managerial.decision-making..

in.the.context.of.business.ethics................................................................118

3.4.5..Recommendations.resulting.from.research.results.on.ethics.

in.managerial.decision-making..................................................................119

3.5. Ethics.programme.of.organisation......................................................................120

3.5.1. Theoretical.basis.of.ethics.programme.of.organisation...........................120

3.5.2. Analysis.of.research.results.of.the.most.suitable.ethics.programme.

elements.for.fostering.managerial.ethical.thinking..................................129

3.5.3. Discussion.on.research.results.of.the.most.suitable.ethics.programme.

elements.for.fostering.managerial.ethical.thinking..................................133

3.5.4. Summary.of.research.results.of.the.most.suitable.ethical.programme.

elements.for.fostering.managerial.ethical.thinking..................................138

3.5.5. Recommendations.resulting.from.research.results.of.the.most..

suitable.ethics.programme.elements.for.fostering.managerial.ethical.

thinking.......................................................................................................139

3.6. Overview.of.basic.research.findings.and.recommendations..............................140

CONCLUSION...................................................................................................................145

BIBLIOGRAPHY...............................................................................................................147

communicate intensively and explain reasons of their decisions or acting. It isrecom

mended that behaviour of a leader should copy the behaviour of an organisation

outside, i.e. to public. It is especially important that leader ́s behaviour corresponds

with exposed organisational values.

46

If behaviour of the leader does not confirm formal manifested organisational

values or it is in opposition to them, employees ́ trust in proclaimed organisational

values is broken. Especially, when ethics programme of an organisation is violated, it

is a serious problem. With its definition we deal in the following subchapter.

1.10 Ethics programme of organisation

In business environment for a long time prevailed an attitude, that it is sufficient

to have a code of ethics for the ethics development of ethics within theorganisa

tion. Practice, however, showed us, that this is not true. Even though codes of ethics

belong to the most popular tools for implementing ethics in organisations, and the

most spread according to the research, the existence of codes of ethics inorganisa

tions does not automatically guarantee the creation of ethical organisational culture.

Code of ethics is a document, which has to have supportive measures for itsfunction

ing to become a regulator of employees ́ behaviour. At the same time, it has been

stated, that it is necessary to have control mechanisms to find out, whether code of

ethics is being respected. What if we find out, that code of ethics is not respected?

What will happen in an organisation, if management will not react to the code of

ethics violation? Who has competences and skills to manage the process of the code

of ethics implementation? Ethical matter, similarly as any other matters within an

organisation can develop only when they become a part of the management system.

They must be planned, embedded in leadership and controlled. All of these findings

lead to conclusion, that should the code of ethics code be functional, there have to be

several accompanied ethical mechanism and actions, which create a unified system.

This system is called ethics programme of organisation.

Our understanding of organisational ethics programme is based on A. Remišová ́s

definition, according to which ethics programme of an organisation “represents

46

Organisational values mirror priorities of people within company. They define, what the ideal

worth to follow is, and point out, which acting is good and desired. They limit the behaviour of

employees towards each other and to external stakeholders. In organisational culture there are

hidden, implicit values and so called exposed values. Exposed values are those, which are being

presented and manifested to public, for example through the website, information materials,

leaflets, brochures, etc. They are a “shop window” of the organisation. Hiddenorganisation

al values are those, which are considered by employees as important and they follow them in

their real acting. In ideal case, all exposed values are also internalized. Employees have adopted

them and behave according to them. For further information on this topic see LAŠÁKOVÁ,

A. 2008. Výskum organizačnej kultúry (na príklade uniVerzitnej knižnice

V BratislaVe). BRATIsLAVA : UKB, 2008.

27THEORETICAL BAsIs

a complex system of logically connected ethical beliefs, values, rules, processes and

types of communication, which organisation accepts for a long-term and continuous

development of ethics in its organisational culture”

47

specific ethics programme consists of the following elements:

48

1. set of ethical demands.

2. Ethical infrastructure.

3. Forms and means of communication.

The core of ethics programme is a complex of ethical demands – values, norms

and principles representing ethical standard of organisation. To make ethicalde

mands (usually expressed in code of ethics) functional, organisation has to create

an interconnected system by institutionalisation of ethics forms. To make ethics

real, it has to be in each sphere and action of an organisation. In our research we

focused on examination of the second element of ethics programme, i.e. on task

of individual elements of ethical infrastructure and their influence on conscience

and knowledge of managers. A lot of ethics forms, that can possibly create ethics

infrastructure, are described in professional literature. Prevailing majority of these

mechanisms are known from business practice in the UsA, where the application

of business ethics to management system of the organisation started earlier than in

European companies. There is a lot of mechanisms, of which help is needed to apply

ethics into organisation. We accept the division of institutionalisation of ethic forms

to five main categories, out of which each has concrete forms and mechanisms. We

speak about the following categories:

» written materials and documents,

» subjects and bodies,

» channels of information transfer,

» education,

» control.

49

Which concrete forms of institutionalization of business ethics will become a part

of ethics programme of an organization depends on social conditions, in which

organisation is active.

Adoption of ethics programme is a decision of strategy. such decision is being

applied predominantly by organisations, which accept the role of functional business

ethics, commit to social responsibility of companies, have good owner governance

and consider their position analogically to responsible citizen. It can happen in

47

REMIŠOVÁ, A. 2015. súčasné trendy podnikateľskej etiky – od teórie k praxi. Bratislava : Wolters

Kluwer, 2015, p. 75.

48

REMIŠOVÁ, A. 2015. súčasné trendy podnikateľskej etiky – od teórie k praxi. Bratislava : Wolters

Kluwer, 2015.

49

REMIŠOVÁ, A. 2011. Vademékum podnikateľskej etiky. Vademecum of Business ethics.Bratisla

va : sprint dva, 2011

28 Chapter 1

section D was the one to close the questionnaire. After collecting sufficientnum

ber of answers we started to analyse them. All answers were transferred to .xls file

and followingly coded (given ID) for analysis in statistical Programming forso

cial sciences (sPss). The next subchapter briefly describes the methods used for

research results analysis.

2.2 Methods of research results analysis

The obtained data were assessed with the use of several statistical methods. For

the purposes of this monograph we used only basic results analysis, which illustrates

the overall character of our sample and how respondents answered on questions that

were posed. Hence we used mainly frequency analysis and descriptive data analysis.

However, in other publications in scientific conference proceedings and journals,

we have used complex statistical methods for the purposes of results analysis, by

the means of which partial relations between variables were studied. In general, the

following methods of results analysis were used in the research:

» Frequency analysis – is used for examining and characterisation of frequencies’

distribution.

» Contingency tables or cross-tabulation – enables to find out the number of

respondents in specific categories. The relationship between cross-tabulatedvari

ables is examined.

» Pearson ́s Chi-square independency test – finds out the rate of independency

between two nominal variables.

» Correlation matrix – examines the rate of dependency among specific variables.

» Partial correlation – is used for determining the rate of dependency of twovaria

bles with eliminated impact of the third variable.

» Reliability analysis – is used for estimation of reliability and identification of those

suspicious items, which could decrease the overall reliability of the scales.

» Factor analysis – multivariate statistical method aimed at creating some newun

observable variables (factors) by the means of which original number of data is

being reduced and still the meaning of what was originally measured is respected.

» T-test – is used for comparing mean values (averages). We can compare the mean

value of a sample with the mean value of population or compare two meanval

ues of two samples. One sample T-test can be used in case, when we want tocom

pare the mean values of a sample with a certain value, mostly with the average of

population. Paired sample T-test is used for comparing pairs of values. It is used

mostly when we want to compare the same population in two different periods

of time or two populations distinctive only in one variable. Independent sample

T-test is used when comparing averages of two samples. These samples do not

have to be of a same size.

40 Chapter 2

» Analysis of variance (ANOVA) – is used for investigating whether there is anyfac

tor influencing the dependent variable. In contrary to T-test, it enables tocom

pare more than two groups in one dimension.

» Linear regression – is basically a broader version of ANOVA with moredimen

sions and it enables to work with variables as quantitative dimensions (i.e. whereas

ANOVA distinguishes only among age groups, linear regression can work with

age as quantitative variable).

2.3 Characteristics of research sample

section D of the questionnaire, which related to demographic information about

respondents, as well as to the information about their current employer, examined

in sum 21 characteristics. The answers were evaluated by the frequency analysis.

The final assessment entailed also respondents, who did not answer some of the

question (these responses are included in the following charts under the column

“answer missing”). For the purposes of this monograph, we arranged the results from

section D to three parts, according to their semantic relatedness. First, we deal with

individual characteristics of respondents (as managers). second, we analyseorganisa

tions, in which respondents work, and third, we characterize ethics background of

the organisations.

Individual characteristics of respondents. One of the examined characteristic

was the level of management, where respondents work. From this point of view is the

sample divided evenly – a little bit lower representation can be found in the group of

lower level management (chart 2.3). Our research sample is represented by 25,8 %

top managers, 36,2% middle managers and 285 lower level managers, who represent

35,2 % of the sample.

Chart 2.3 Level of management at which respondents work

Management level Frequency % Valid %

Valid

Top management 209 25,8 26,6

Middle management 293 36,2 37,2

Lower level management 285 35,2 36,2

Total 787 97,2 100,0

Answer missing 23 2,8

Total 810 100,0

41REsEARCH METHODOLOGY

Respondents evaluated on seven point grading scale, to what extent the statements

described their actual leader. Number 1 meant “I strongly disagree” and number 7

meant “I strongly agree”. The resulting level of ethical leadership was then calculated

as the average value of all respondents ́ answers on the given grading scale in all

ten factors.

3.1.2 Ethical leadership in Slovakia – results analysis

In our research took part 810 managers. The average values of the answers

are given in chart 3.1 and graphically pictured in picture 3.1. The level of ethical

leadership in slovakia reaches 5,07. According to the results we assume, that ethical

leadership in slovak business environment is realized on average or slightly above

the average level. For comparison, in the first studies of ethical leadership done by

M. E. Brown et al.

26

in American business environment, the level of ethical leadership

was between 3,37 and 3,88.

Chart 3.1 Ethical leadership in Slovakia –

average value of respondents ́ answers

Factors of

ELS

Listens

to what

employees

have to say

Disciplines

employees

who violate

ethical

standards

Has the best

interests of

employees

in mind

Makes

fair and

balanced

decisions

Can be

trusted

Overall

level of

ethical

leadership

Average 5,60 4,51 5,24 5,26 5,55

Factors

of ethical

leadership

Discusses

business

ethics or

values with

employees

sets an

example of

how to do

things the

right way

in terms of

ethics

Defines

success

not just by

results but

also the way

they are

obtained

When

making

decisions,

asks “what

is the right

thing to

do?”

Conducts

his or her

personal

life in an

ethical

manner

Average 4,68 4,99 5,05 4,61 5,23 5,07

26

BROWN, M. E. – TREVINO, L. K. – HARRIsON, D. A. 2005. Ethical leadership: A sociallearn

ing perspective for construct development and testing. In organizational Behavior and Human

decision processes. 2005, no. 97, p. 117-134.

65REsEARCH REsULTs

Pict. 3.1 Ethical leadership in Slovakia –

average value of respondents ́ answers

The average value of all answers is above 4, which can be interpreted as the

respondents ́ tendency to rather agree with given statements

27

. This means that

respondents evaluate their leaders in a rather positive way. six of ten statements

reached higher value than 5, the rest of the statements was between values 4,5 and 5,0.

The first statement reached the highest average value (5,60). Higher score was

also reached at leader ́s trustworthiness evaluation (5,55; statement 5). Respondents

agreed with the statement “Makes fair and balanced decisions about the leader ́s

decision” (5,26; statement 4), “Has the best interests of employees in mind” (5,24;

statement 3), “Conducts his or her personal life in an ethical manner” (5,23;state

ment 10) and “Defines success not just by results but also the way they are obtained”

(5,05; statement 8).

As it has been already mentioned, the other four statements reached the average

value below 5, but this result still can be considered as an agreement of respondents.

statement 7, which says that manager “sets an example of how to do things the right

way in terms of ethics”, reached the average value of 4,99. Lower level of agreement

was at the statement 6 (Manager “discusses business ethics or values with employees”

– 4,68) and at the statement 9 (When making decisions, manager asks “what is the

right thing to do?” – 4,61). The lowest rating was at the statement 2, “Disciplines

27

Value 4 was in the questionnaire defined as “I cannot clearly state”, and therefore it divided

the scale on disagreement (value of the answer below 4 – the lower the value is the stronger

the disagreement is) or agreement (value of the answer above 4 – the higher the value is the

stronger the agreement is).

66 Chapter 3

Therefore, we need to focus on the fact – as addressed managers proved –, that

behaviour of an individual is determined by the behaviour of the significant others

(in his or her environment). This variable is included in the factor of ethical behaviour

of an organisation, which was evaluated as the most important in relationship to

decision for ethical leadership by majority of respondents (93,97 %). In childhood,

parent is the most important person for a child (primary environment), later the

influence of the secondary environment emerges, too, with its personalities, idols,

etc. In adulthood, the environment, where one spends most of his or her time is the

one to determine values, attitudes, ways of thinking and behaviour. In workplace

or organisation, of which one is a part, one finds examples of behaviour, which

Chart 3.2 List of factors influencing ethical leadership development

according to the importance given by respondents

Order Factor

Average value

of answers

%

1. Ethical behaviour of top management 6,379 93,97 %

2.

Management clearly declares the necessity to

respect valid laws

6,185 92,49 %

3.

The organisation calls for adherence to the

human rights

5,956 86,82 %

4.

Opportunity to openly discuss ethical issues on all

levels of management about any problems within

an organisation

5,916 87,19 %

5.

Moral acknowledgement to those, who implement

organisational values in practice

5,845 85,71 %

6.

Transparent fight of organisation against

corruption

5,799 82,14 %

7.

Those, who violate the code of ethics in an

organisation are penalized

5,715 83,62 %

8.

Transparent fight of organisation against

discrimination

5,657 79,19 %

9. Good reputation of organisation in public 5,582 81,65 %

10.

Transparency and objectiveness in managerial

career development

5,572 81,16 %

11. Fair compensation for managers 5,411 75,49 %

12. Organisation has a code of ethics 5,364 78,57 %

13.

Long-term economic prosperity of an

organisation

5,056 67,49 %

77REsEARCH REsULTs

ship in opposition to other forms of “bad” leadership. According to their opinion,

destructive leadership cannot be understood in terms of no leadership, i.e. when

the leader does not lead and thus does not influence others. In their opinion, the

absence of leadership (e.g. focusing on oneself, disinterest, etc.) is not destructive.

Even inefficient leadership, which is of harmful character, cannot be considered

as destructive. Low work performance or occasional unintentional harming others,

where the leader does not influence other intentionally and does not have an interest

in harming others, is according to D. V. Krasikova, s. G. Green and J. M. LeBreton

not a part of destructive leadership.

Toxic leadership

The concept of toxic leadership has become more and more popular within the

group of authors dealing with unethical leadership. In the current academiclitera

ture, this term is extremely popular. K. L. Pelletier

50

defines toxic leader as a person,

who systematically and repeatedly harms others. There are several concepts, which

can be covered by toxic leadership, e.g. dysfunctional leadership, bad leadership and

tyrannical leadership. At the same time, the author states, that toxicity of a leader

can be variously depending on behaviour or needs of the followers. People, who are

on good terms with the leader, gain advantages from him or her, consider his or her

behaviour as less toxic comparing to subordinates, who are not on good terms with

the leader.

In accordance with A. Goldman

51

and J. Lipman-Blumen

52

we suppose, that

a crucial characteristic of toxic leadership is, that unethical behaviour is being

spread throughout the organisation. As authors R. F. Baumeister, E. Bratslavsky,

C. Finkenauer and K. D. Vohs

53

introduce in their article, “evil” is stronger than

“good”, and this is applicable in the wider frame of psychological phenomena.

According to our opinion, regardless of psychological reasons why people imitate

harmful behaviour of leaders, the core of toxic leadership resides in the fact that

harmful behavioural patterns of leaders spread within company both horizontally

and vertically, i.e. according to an old saying “people will become as you treat them”.

The concept of toxic leadership emphasizes the idea that this kind of behaviour

50

PELLETIER, K. L. 2010. Leader toxicity: An empirical investigation of toxic behavior andrhet

oric. In leadership. 2010, 6(4), p. 373-389; PELLETIER, K. L. 2012. Perceptions of andreac

tions to leader toxicity: Do leader–follower relationships and identification with victim matter?

In the leadership Quarterly. 2012, 23, p. 412-424.

51

GOLDMAN, A. 2011. Demagogue to dialogue: An alternative to toxic leadership in corporate

downsizings. In organizational dynamics. 2011, no. 40, p. 235-241.

52

LIPMAN-BLUMEN, J. 2005. Toxic leadership: When grand illusions masquerade as noblevi

sions. In leader to leader. 2005, no. 36, p. 29-36.

53

BAUMEIsTER, R. F. – BRATsLAVsKY, E. – FINKENAUER, C. – VOHs, K. D. 2001. Bad is

stronger than good. In review of general psychology. 2001, 5(4), p. 323-370.

88 Chapter 3

spreads as a virus within an organisation. Its harmfulness lies in direct attack of

healthy parts of an organisation.

Dysfunctional leadership

Even though it appears to be one of the oldest terms in this context (see G. B.

Graen, F. Dansereau, T. Minami

54

), the current academic discussion does not pay

much attention to it. Authors using this term (e.g. M. Dandira;

55

M. Walton

56

), did

not come to sufficient specification of characteristic aspects, on the grounds of which

it would be possible to distinguish this style from other types of leadership. They

agree that dysfunctional leadership is linked with negative personal attributes of a

leader as well as with behaviour, which is in opposition to efficient and righteous

behaviour of a leader. A crucial criterion for identifying dysfunctional leadership

style is the existence of the consequences tied to qualities and behaviour of a leader.

Authors define it mainly on the basis of negative actions in relationship to individuals,

but also to organisation.

Dark leadership

Dark leadership is one of the most up-to-date terms in the current discussion

on leadership. Authors want to popularize the topic of unethical leadership. They

suggest using this substitutive term, which evokes something mysterious, strange,

forbidden, and deviating. However, definitions of the new term do not bringany

thing new to the existing discussion. Typical example is an effort of authors A.Mar

shall, D. Baden and M. Guidi

57

to define dark leadership as “a gallery of different

psychological diseases” of leaders.

58

In this definition, they proceed from the Dark

Triad model (D. L. Paulhus and K. M. Williams

59

). Dark leadership is then defined

as egocentric, exploitive and short-term social strategy that results from the leader ́s

psychopathic, narcissistic and machiavellistic tendencies, which step beyond borders

of normal and can be understood as a developed personality disorder.

54

GRAEN, G. B. – DANsEREAU, F. – MINAMI, T. 1972. Dysfunctional leadership styles. In

organizational Behavior and Human performance. 1972, no. 7, p. 216-236.

55

DANDIRA, M. 2012. Dysfunctional leadership: organizational cancer. In Business strategy series.

2012, vol. 13, no. 4, p. 187-192.

56

WALTON, M. 2011. Leadership behavior-in-context: An antidote to leadership hype. Inindus

trial and commercial training. 2011, vol. 43, no. 7, p. 415-421.

57

MARsHALL, A. – BADEN, D. – GUIDI, M. 2013. Can an ethical revival of prudence within

prudential regulation tackle corporate psychopathy? In journal of Business ethics. 2013, vol. 117,

no. 3, p. 559-568.

58

MARsHALL – BADEN – GUIDI, ref. 58, p. 560.

59

PAULHUs, D. L. – WILLIAMs, K. M. 2002. The dark triad of personality: narcissism,Machia

vellianism, and psychopathy. In journal of research in personality. 2002, no. 36, p. 556-563.

89REsEARCH REsULTs

» Minimum one third of respondents consider all of the factors suitable for ethical

development of managers.

» In our business conditions, all forms of business ethics institutionalisation that

might be a part of an organisational ethics programme are known. They belong

to the ethics programme of an organisation, but to different extents. The least

known ethics programme elements are bodies responsible for ethics development,

ethics audit (inquiry), and ethics consulting.

3.5.5 Recommendations resulting from research results

of the most suitable ethics programme elements

for fostering managerial ethical thinking

I. For universities

» For managerial university education we recommend to establish a specialisation

“business ethics manager”. In this specialisation managers would gain knowledge

needed for systematic development of business ethics in an organisation.

» As quick as possible to prepare business ethics courses and trainings and to include

them into study programmes as obligatory subjects for each student of Faculty of

Management, Business or Economy, so that future managers will be informed

about the possibility of business ethics application to the leadership system of an

organisation.

II. For research

» To examine a wider range of factors that might influence ethical development of

managers.

III. For practice

» Organisations should start to bring ethical programme into practice, because as

research clearly showed, elements of ethical programme are factors positively

influencing not only ethical development of managers, but they also help managers

to broaden their knowledge in ethics and employ it in their further managerial

decision-making.

IV. For state administration

» On the level of the Ministry of Education, science, Research and sport of theslo

vak Republic, leading bodies in the area of university education should call forim

plementation of compulsory courses on business ethics or managerial ethics into

the curriculum of economic and managerial faculties.

139REsEARCH REsULTs