MGT594 Leadership and Business Ethics by Emma L Nair https://padlet.com/emmanair/uvfmm1owpr9e A lapse of ethical leadership. en-us 2018-07-23 11:37:06 UTC 2026-02-12 18:35:18 UTC hello@padlet.com Hi, my name is Emma Nair. Here is something about a lapse of ethical leadership. “Understanding the fundamental drivers of ethical lapses in the professions is a critical pursuit of academics and practitioners alike” (Linda M. Sama and Victoria Shoaf (2008), page 39). Sama and Shoaf support the emerging view “that the professions, more so perhaps than other business endeavours, require strong ethical leadership at the helm” (ibid, pages 39-40). “The literature on ethics and ethical leadership makes little distinction between the relative values of ethical leadership in various sectors of the market economy. However, with an increasingly service-oriented and knowledge-based economy in developed countries of the world that together make up nearly 80% of the world GDP (http://www.worldbank.org/), it is useful to probe the extent to which ethics in the professions can contribute to a robust economy, legitimacy aims, and improved moral fibre of the businesses represented in this ever-growing sector, and how unethical professional norms tend to erode growth potential, consumer confidence and market stability” (ibid, page 40). Sama and Shoaf explore “the nature of the professions and how they act as moral communities. A profession is characterized by the mastery of a specific knowledge base and the development of skill and acumen in performance related to that knowledge. Professionals, thus, participate in a very unique form of market transaction, performing work whereby the practice of a specialised skill is linked to the service of others, and therefore the potential to do harm, whether to the individual or to society, is considerable (Bowal and Lau (2005), cited by Sama and Shoaf (2008), page 40). That is, “professional transactions are frequently characterised by their having high moral intensity” (Jones (1991), cited by Sama and Shoaf (2008), page 40). Sama and Shoaf explain that in the 17th Century, the idea “of the professions providing services in an altruistic mode to their communities has been the prevalent characteristic of these occupation.” The professions included were physicians, priests and lawyers. They “addressed the corporal, spiritual and material needs of communities respectively.” The “economic and technological changes of the 19th Century” witnessed the development of many vocations that were also considered to be professions, “based on their foundation in the mastery of a specific knowledge base and extensive training. Modern times have witnessed critical moral lapses in all three of the bedrock professions, along with such lapses in the newer professions as the well-publicized scandals in financial services and accounting” (ibid).“The importance of ethical leadership in the professions is especially pronounced as it responds to a swath of recent scandals in the professions, such as those witnessed at Marsh & McLennan and Arthur Andersen. In these cases, ethical leadership was largely absent (Sama and Shoaf (2008), page 42). Marsh & McLennan Cos, the largest insurance brokerage firm in the world, was charged by New York Attorney General Eliot Spitzer in October 2004 of collecting large amounts of contingent fees from insurance companies to steer business their way ($845 million in 2003 alone) and of rigging bogus bids by competitor insurance firms to make the selection appear to clients to be competitive (Francis (2004), cited by Sama and Shoaf (2008), page 40). This practice of paying contingent commissions has apparently been common in the insurance industry, but its legitimacy is dependent on appropriate disclosure (Perspectives on Ethical Leadership (2005), cited by Sama and Shoaf (2008)). In this context, not only was it not disclosed, but also the associated bid-rigging constituted a deliberate dumping of the client. Marsh was allegedly acting as a professional agent for the client, and the deception caused an immeasurable erosion of trust in the professional.” Although the “lawsuit was subsequently settled out of court, the settlement conditions clearly indicate a belief in the importance of professional leadership in this unethical practice. Spitzer insisted that he would not settle with the company on charges of bid-rigging and price-fixing [while] Mr. Greenberg, the chief executive, was in a position of leadership. In short, he said that he was ‘not going to settle with a company when the CEO doesn’t believe the company’s behaviour was improper’ (Murray (2005), cited by Sama and Shoaf, page 42). It was evident, to Spitzer at least, that reform is impossible without ethical leadership” (Sama and Shoaf, page 42).Reference listBowal, P. and Lau, B. (2005). ‘Just Say it, if You dare’. Journal of the Academy of Marketing Science 33 (2), page 242.Francis, T. and Zuckerman, G. (October 27, 2004). ‘Marsh Spells Out Reforms’. Wall Street Journal (Eastern edition), C1. Jones, T. (1991). ‘Ethical Decision Making by Individuals in Organizations: An Issue-Contingent Model’, Academy of Management Review 16, pages 366-395.Murray, A. (June 8, 2005). ‘Post-Enron Regulatory Changes Have Their Good and Bad Sides’, Wall Street Journal (Eastern edition), A2).‘Perspectives on Ethical Leadership’. (2005). Proceedings of the Fifth Annual James A. and Linda R. Mitchell/American College Forum on Ethical Leadership in Financial Services. The American College, Bryn Mawr, PA. Sama, Linda M. and Shoaf, Victoria. March 2008. ‘Ethical Leadership for the Professions: Fostering a Moral Community.’ In Journal of Business Ethics, Volume 78. No. 1/2. The Twelfth Annual International Conference Promoting Business Ethics. Pages 39-46. Published by: Springer. Retrieved 22/7/2018 from URL: http://www.jstor.org/stable/25075588 emmanair https://padlet.com/emmanair/uvfmm1owpr9e/wish/270860589 2018-07-23 11:45:42 UTC https://padlet.com/emmanair/uvfmm1owpr9e/wish/270860589