M4 Assignment: Leadership Behavior You have been hired by Doris Ann Riley, the head of HR for King Conductors to analyze a management/leadership situation. She is concerned with what she is hearing about one of the newest sales people, Charlotte Forsythe, who, in the process of being lured away from her employer in England, received many perks. Charlotte has made sales that have made a significant difference for the company. Doris is concerned that Charlotte is going to renegotiate an increase in her, already large, salary and the impact that will have on other employees. After reading the case study, develop no more than a twopage, singlespaced (not including reference and title page), management memo. In order to develop your memo, you will need to: 1. Read the case study, Commissions for Charlotte, on pages 252-253 of the Daft (2015) text. 2. As a managerial consultant hired by Ms. Riley, you have been asked to provide feedback on the situation brewing at King Conductors relative to employee morale, productivity, employee empowerment, and the progress principle. Incorporate responses to the questions below in your analysis: What theories of motivation help explain Charlotte's demands and the reactions of other employees to those demands? Why? What options can you think of for handling Charlotte's demand for even higher commissions? Which option would you choose? Why? The role of the leader is to create a situation in which followers higher needs and the needs of the organization can be met simultaneously\" (Daft, 2015, p. 249). Using the Goleman (1998) article and the assigned readings from Daft, how can the leader's level of emotional intelligence and the expectancy and equity theories result in an increase of intrinsic rewards at King Conductors? 3. Develop each of the three items as fully as possible. Support your analysis with theories and concepts from the readings, including the online articles. Cite all sources using the APA in-text citation style. Even though this is a role-play and you might not otherwise cite theory in a management memo, you MUST for this assignment. Memorandum Format TO: FROM: RE: DATE: Lisa Mahoney YOUManagerial Leadership Consultant Analysis of Situation TODAY'S DATE The body of your memorandum should be single spaced and cannot exceed two pages. Because you are the managerial leadership consultant specifically hired by Doris Ann Riley, the head of HR for King Conductors. You will need to tell her what the problem is, what the options are (be sure you are grounded in the theory), and what you recommend (and why). Remember, you are dealing with a very sensitive situation at this company. They've hired you to consult with them and provide feedback on the impact, on other employees, of a top sales person's possible re-negotiation of her, already large, salary. Analyze how things can be improved through the application of managerial leadership strategies. You need to examine what the situation is, apply theory from the textbook readings and other sources to the problems/issues raised in the case study, and let them know as professionally (and gently) as possible what you might recommend. Because it is your job to get your message across, feel free to use any gimmicks that you deem appropriate: boldfacing, subheadings, and the like. Any memos that run to a second (or third) page should use a heading format for the subsequent pages which is single spaced and left justified (i.e., on the top left-hand edge of the page). An example follows: Your name Today's date page 2 Feel free to provide attachments, graphs, or any other material which you feel will help the CEO understand your arguments. Remember not to preach to your audience, after all, Ms. Riley wants your advice not your condemnation! Special Note: Be sure that you make reference to theory (and cite the references using the APA format) within the text of the memo. I know this is different from what you are used to doing. After all, when was the last time you placed a citation to leadership theory in one of your memos? This is a college course, however, and it is the only way you can demonstrate mastery of the topic -- that translates to an equivalent overall grade in the course. You will use the textbook primarily, although references to the Online Articles are required. References from the discussion comments and the selfassessments can also be used as appropriate. Provide a Reference List at the end of your memo, citing all sources, using the APA format. Remember, do not use anyone else's words without attribution. If you do, there will be retribution. Knights, D. & O'Leary, M. (2005). Reflecting on corporate scandals: The failure of ethical leadership. Business Ethics: A European Review. 14(4), 359-366 Business Ethics: A European Review Reflecting on corporate scandals: the failure of ethical leadership David Knights and Majella O'Leary* Introduction In recent times, there has been a proliferation of concern about ethical leadership within corporate business, not least because of the numerous scandals at Enron, Worldcom, Parmalat and major Irish banks such as National Irish Bank (NIB) and Allied Irish Bank (AIB). These have not only threatened the position of many senior corporate managers but also the financial survival of some of the companies over which they preside. Scandals of this kind have raised the profile of ethics not only as a legitimate focus for corporate resources and practices but also for business educators and particularly the MBA in business schools. There is an increasing demand for business ethics to be in the core curriculum and not just in limited parcels scattered across different modules following an ' ''add ethics and stir'' mentality' (Gold 2005). It is our argument that some, if not all, of the ethical problems in corporate capitalism revolve around a failure of leadership. This provides us with a platform for examining, reflecting on and theorizing the failure and possibility of ethical leadership. A general argument of the paper is that the single most significant obstacle to ethical leadership is the pre- occupation with self and success that is a distressing legacy of the Enlightenment concern with human autonomy. We will focus first on examining the public investigations of NIB and AIB and how they highlight the failure of corporate ethical leadership. Secondly, we profile the Irish political landscape, and in particular the leadership of Charles Haughey, as this can be seen as a historical and cultural background that is a reflection of the preoccupation with self and success, but also reproductive of the conditions that lead to these kinds of banking scandals. In the final section, we seek to interpret these ethical scandals in terms of a discussion of ethical leadership in the modern corporation. On review- ing the literature on leadership, we conclude that it invariably reflects and reinforces an atomistic view of social life that encourages an instrumental attitude to work where individual success defers or deflects the centrality of moral relationships. We propose a focus on the Aristotelian version of virtue ethics that promotes community values and solidarity so as not to separate the individual and society in those Enlightenment ways that only sustain a pre-occupation with the self and personal success. This is not to reject Enlight- enment thinking per se but simply to recognize its negative as well as its positive features and explore possible alternatives that may strengthen an ethics of responsibility to the other rather than merely to the self. Corruption in Irish banks In this section, we explore the unethical behaviour and improper practices of NIB as well as briefly considering similar practices at AIB. NIB was incorporated as Midland Montague Leasing (Ire- land) Limited in 1978. It changed its name to Northern Bank (Ireland) Limited in 1986 and was licensed to carry on banking business by the Central Bank of Ireland, taking over the Republic of Ireland Business of Northern Bank. In 1987, the share capital of the company was acquired by National Australia Finance (UK) Limited and in 1998 the bank changed its name to National Irish Bank. The investigation of unethical and impro- per practices at NIB relate to the period from 1988 to 1998. The corporate scandals at NIB were revealed after a trade union representative blew the whistle to investigative reporters at the Irish television station RTE. The reporters made a number of serious allegations against NIB, which became the subject of a High Court Investigation, commissioned by the Minister for Enterprise, Trade and Employment. The report of this High Court investigation, which was published on 31 July 2004, informs our discussion. The report noted the following improper practices carried out by NIB: Bogus non-resident accounts were opened and maintained at NIB branch level, enabling customers to evade tax through concealment of funds from the Revenue Commissioners. Fictitiously named accounts were opened and maintained in the branches, enabling custo- mers to evade tax through concealment of funds from the Revenue Commissioners. Clerical Medical Insurance (CMI) policies were promoted as a secure investment for funds undisclosed to the Revenue Commis- sioners. Special Savings Accounts had Deposit Interest Retention Tax (DIRT) 1 deducted at an in- correct and very low rate and the applicable statutory conditions were not observed. There was improper charging of interest to customers. There was improper charging of fees to customers. (Report on Investigations in the Affairs of National Irish Bank 2004: i (High Court 2004)). 360 The High Court Inspector's Report was heavily critical of the Bank. Of particular interest to this paper is the fact that the Inspector's report was particularly concerned with the misconduct of leaders at NIB: We believe that responsibility for the practices lay at a higher level in the bank . . . it was their [senior management] duty to ensure that the business of the bank was so conducted so that such practices did not occur and, if they did, they were stopped immediately. (Report on Investigations in the Affairs of National Irish Bank 2004: ii (High Court 2004)) The bogus non-resident accounts were most often opened at the suggestion of branch managers but when senior managers were alerted to these practices, they failed to respond, neither prevent- ing new accounts being opened nor closing existing accounts. Even when senior managers eventually reacted and suggested that non-resi- dent accounts be examined in order to ensure that the appropriate documentation was retained, they accepted as evidence a self-certified declaration that the customer was non-resident. Senior managers were also irresponsible in failing to inform bank employees of the provisions of the 1986 Finance Act stating that all accounts must have DIRT deducted unless non-resident. Simi- larly, branch managers were required by senior managers to charge for management and admin- istration time, but no guidelines were given regarding how these charges should be made. Subsequently 'troublesome' customers were charged extra for management and administra- tion time, but customers were not informed that such charges were being made. The report there does not apportion blame for the above to branch managers, arguing that they were working within a very difficult operational environment where they received inadequate support and training. Even when internal audits raised the issue of inappropriate charging of fees, senior managers did not stop the practice and there was no attempt by the Bank, until the inspectors were appointed, to refund any money to customers. Leaders at NIB appeared to be culpable of more than turning a blind eye or being incompetent. Although they condemned fictitiously named accounts, they did not want to lose the funds contained within the bogus accounts and so they simply moved the funds to Clerical Medical Insurance (CMI) accounts where tax was still evaded. The Inspec- tor's report concluded that these solutions were improper because they served to encourage customers to continue to evade tax. In relation to the CMI policies, senior financial services managers promoted the policies specifically as a secure home for undisclosed funds and this use of the policies was emphasized to customers and employees alike. These policies became crucial to the success of NIB as the commission earned from the introduction of customers to CMI began to constitute a very large percentage of the com- pany's profits. In addition to these practices, leaders at NIB did not co-operate with the High Court investigation. Leaders at NIB fostered a culture of profit maximization, targets and career success, advo- cating or at least condoning the unethical behaviour of employees. The Inspector's report specifically refers to this target-driven culture within which employees were under severe pres- sure: The branch network was target driven - there were, amongst others, targets for fee income and deposits, but limited support by way of systems or training to enable the achievement of these targets. Managers felt under pressure to meet these targets, in the setting of which they had negligible participation and which many considered unrea- sonable; they feared criticism and possible humi- liation before their fellow managers if they did not meet the targets set. (Report on Investigations in the Affairs of National Irish Bank 2004: ii (High Court 2004)) However, it must be pointed out that NIB existed within a wider culture of corruption, particularly within the banking sector, and this is something that is considered. In the investigation in parti- cular, it is noted that a Comptroller and Auditor General's investigation showed that DIRT eva- sion was widespread during the period in question and that NIB was not by any means the worst offender. In fact, AIB, the number one high street bank in Ireland, has also been embroiled in a series of scandals; it too operated tens of thousands of bogus non-resident accounts and it also avoided tax it owed the Exchequer. The Inspector's report at NIB suggests that leadership played a significant role in the corpo- rate scandal, while acknowledging the wider culture of profit maximization and targets within the banking sector. However, it is not only leadership at NIB that needs to be investigated in the context of corruption in Irish business. When examining the Irish financial scandals, it is interesting to consider the wider context in which they took place and, in particular, the level of political corruption in Ireland prior to and simultaneous with the NIB and AIB scandals. In the following section, therefore, we consider the political context and especially how it was dramatically influenced by the leadership of Charles J. Haughey who, it transpired, set a less than appropriate ethical example. Political corruption and the leadership of Charles J. Haughey Charles J. Haughey was the sixth Irish Taoiseach (Prime minister) serving three periods in office (1979-1981, 1982 and 1987-1992). He was first elected as a government minister in 1957 and held his seat until his retirement in 1992. During that period, he served as Minister for Justice (1961- 1964), Minister for Agriculture (1964-1966), Minister for Finance (1966-1970) and Minister for Health (1977-1979). Haughey was credited with reforming the Irish economy in the late 1980s and early 1990s with his incredibly conservative budgets. For this reason, it came as an enormous shock when Haughey himself was accused of engaging in crooked financial deals in order to sustain his out-ofcontrol personal spending and lavish lifestyle. These allegations were investigated in the McCraken and Moriarty Tribunals. Although Haughey was well paid as a minister and Taoiseach, he continuously sought ways to supplement his income. He dabbled in farming and horse breeding (interestingly, during office he made horse-breeding tax exempt) but his business activities were largely unsuccessful, leaving him in serious debt and subsequently leading him to open personal and business accounts with AIB bank and borrowing significantly. By September 1971, Haughey was a quarter of a million in debt and his debt continued to spiral out of control although, in order to deal with the AIB debt, he was also borrowing from Northern Bank (NIB). In July 1974, at a meeting with AIB officials, Haughey said that he found any restraint on his accounts unnecessary and infuriating despite the fact that the Bank had not agreed to let him draw such large amounts of money in the first place. He just kept writing cheques and the bank kept honouring them. AIB described Haughey as a key business influencer and noted that he should be handled with care even if he insisted on with- drawing from the bank hundreds of thousands of pounds that did not belong to him (Kerrigan & Brennan 1999: 140-141). Haughey as Taoiseach was central to the financial scandals revealed from the mid-1990s onwards. His financial dealings and corrupt behaviour were the subject of two major investigations. First was the McCraken tribunal, which was set up in 1997 to investigate payments by supermarket chief Ben Dunne to Charlie Haughey and another government minister. This relatively short tribunal proved the relationship between Dunne and Haughey and exposed the trail of the finances. However, the Moriarty tribu- nal was set up later in 1997 to take the matter further and it was this tribunal that revealed the level of Haughey's indebtedness to AIB. It is particularly interesting to reflect on the relationship between Charles J. Haughey and the AIB and NIB Banks and, in particular, how his withdrawal of money from the banks that did not belong to him resembles in some way the manner in which the banks overcharged customers and acquired money to which they were not entitled. Given his position as leader in the country, there is little doubting the significance of this ethical failure for the moral fibre of the nation. While not subscribing to a view of cultural determinism in these matters, the example he set cannot be lightly dismissed. At the same time, the pre-occupation with material and symbolic success that seems to drive Prime Ministers and corporate financial institutions to corruption needs to be examined more thoroughly. We proceed to do this by exploring what we believe to be problematic in discourses of leadership and more especially those with a focus on ethics. Unethical leadership and preoccupation with the self Our investigation of Irish banking scandals raises the issue of the role of leadership in corporate corruption. We suggest that a failure in ethical leadership offers a plausible account of the corporate scandals and that corporations face a significant problem if business leaders (and indeed political leaders) fail to 'actively promote ethical ideals and practices' (Brien 1998: 391). It is possible to trace this failure in ethical leadership to the dominance of individualism within post- Enlightenment discourse and practice. This is not to argue for abandoning the Enlightenment completely because, as Foucault (1994) has argued, in the 19th century, at least, the Enlight- enment was a complex 'set of events' and 'historical processes', one key feature of which was an intellectual and philosophical concern with 'the mode of reflective relation to the present' (Foucault 1994: 44) - in short, a process of collective and social self-reflection. Few of us would find this problematic, but in the 20th century, partly as a result of some conflation with humanism, this focus within the Enlightenment has been displaced by a pre-occupation with the centrality of individual reason and rationality, and the autonomous subject as its condition of possibility. The belief in individual autonomy is not so much wrong as dangerous because it can serve as an oppressive force - imprisoning us in the 'rational promise of self-determination' (Knights & Willmott 2002). Being not so much for reason as against unreason enables Foucault to reject these individualizing effects of the conflation and confusion between humanistic thinking on autonomy and Enlightenment reason. In contemporary life, this individualism man- ifests itself in a pre-occupation with the self - that is, an overwhelming yet often self-defeating concern to have one's self-image confirmed by others. Not only does a pre-occupation with the self reflect and reproduce traditional ethical discourses including those specific to business, it also informs most modern approaches to leader- ship. In this section, we explore the individualistic and psychologistic strains, which dominate the leadership literature, in general, and the ethical leadership literature, in particular. We suggest that ethical leadership is impossible without some attempt to transcend the pre-occupation with the self that is the individualistic legacy of the Enlightenment. Of recent time, there has been a revival in academic studies of leadership partly because at least practising managers have been turning their minds to these questions. Early studies of leader- ship such as Burns (1978) took quite a common- sense view of leadership as mobilizing resources so as to engage and motivate followers while Bennis & Nanus (1985) treated leadership in terms of having a vision, communicating it, generating trust and having sufficient self-knowledge and self-esteem to be able to learn anew. Leadership studies in the 1980s were strongly influenced by the prevailing dominant psychological literature, which was abstract, reductionist and scientistic. That is to say, leadership was identified as the qualities or traits possessed by individuals who were widely viewed as leaders. Traits of leadership - including qualities such as 'initiative', 'charis- ma', 'drive', 'intelligence', 'self-confidence' and 'integrity' - were mapped and correlated one against another and linked to particular leaders; or variables relating to styles of leadership (e.g. autocratic vs. democratic) were manipulated and the effects observed in laboratory conditions (Likert 1961). Stodgill (1974), for example, found these traits to be ambiguous and ill defined and reported an absence of any correlations between them. Apart from the difficulty of defining these qualities, in practice it was found that few leaders shared exactly the same traits, but more importantly, these so-called leadership traits were found to be equally present among those with no experience of leadership (Bryman 1986). In identifying traits within particular individuals, these leadership studies committed the sin of essentialism whereby there was no alternative to the understanding that leaders are born rather than made, thus diverting all the strain for discovering leaders to the point of recruitment. Repairs to the trait approach took different forms but as Fiedler (1967) makes clear, the succeeding contingency and followership studies generally remain locked into an individual-con- text dualism format. Overall, the dominant strains within leadership studies are individualistic, psychologistic and deterministic, reflecting and reproducing the autonomous subject of Enlight- enment thinking. This has been the case until the constructionists begin to argue that leadership is about neither an essential individual nor an essential context but is an outcome of interpreta- tion (Grint 2000). Within such a framework, leadership would simply be the embodied mani- festation of collective and communal interpreta- tions of appropriate behaviour in particular contexts. In this sense, leadership and the context in which it is practised are mutually constitutive of one another. If leaders fail to understand that leadership is about interpretation, there is a greater tendency for them to fall back on the con- ventional individualistic approaches to leadership, which is likely to make ethical leadership proble- matic because leaders become preoccupied with their own image as leaders rather than with their ethical responsibility to others (Levinas 1986). Given the psychologistic approach taken in the study of leadership generally, it is not surprising that the literature on ethical leadership is similarly individualistic, has a strong focus on character and is often driven by virtue ethics. In Aristotelian virtue ethics (sometimes called aretaic from the Greek are te, translated as 'excellence or virtue'), morality is internal and the key to good lies not in rules or rights, but in the classic notion of character (honesty, fairness, compassion and generosity). According to Stephens (1882), the morality should be expressed in the form of 'be this', not in the form of 'do this'. Rather than focusing on consequences (as in teleological ethical theories, e.g. the Utilitarian principle of the greatest good to the greatest number) or duties (as in deontological ethical theories), virtue-based ethical systems centre on the agent, the character and dispositions of persons. The central question here then is 'what sort of person should I become?', resulting in virtue ethics overly relying on a relatively arbitrary and almost inexhaustive list of character traits as the foundation of morality. Virtue-based ethics seeks to produce excellent persons who both act well (out of spontaneous goodness) and serve as examples to inspire others. In contrast to deontology, virtue ethics focuses exclusively on the agent rather than the act and, in this sense, can be highly or wholly decontextualized. Many researchers on ethical leadership focus on the development of a specific virtue important in leadership. For example, Molyneaux (2003: 347) emphasizes 'meekness', which he argues is an important personal quality for highest-level lea- dership: 'meekness' is not about 'powers foregone' but 'powers controlled and exercised with discernment'. Similarly, Morrison (2001) focuses on 'integrity', which he argues forms the foundation of character and is essential to sustainable global leadership and the development of goodwill or trust. Drawing on Plato's work, Takala (1998) provides an investigation of ethical leadership that emphasizes the virtues of 'prudence, courage, temperance and justice'. While virtue ethics can be seen to share similar essentialist tendencies to those heavily criticized in trait approaches to leadership, we see merits in some versions of virtue that draw on the work of Aristotle and MacIntyre. Within the literature on ethical leadership, for example, Takala (1998), argues that the larger community informs our virtues, and Arjoon (2000) emphasizes individual and collective responsibilities and the develop- ment of character. Arjoon rejects deontology on the basis that it focuses on the minimalist or negative aspect of ethics, rights and duties and suggests that virtue ethics is more basic than the other moral philosophies: 'the virtue of responsi- bility or justice . . . allows us to recognize and respect the rights of others, which is the source of our obligation and a sense of duty for the welfare and happiness of others' (Arjoon 2000: 162). In the following section, we explore further the idea of virtue presented in the work of Aristotle and MacIntyre and we consider the challenge it offers to standard philosophies of individualism. Overcoming the preoccupation with the self: MacIntyre and virtue ethics In the previous section, we outlined the way in which the ethical leadership literature draws quite heavily on the concept of virtue and, in particular, the post-Enlightenment views of MacIntyre (1991). We want to further this interest in MacIntyre in order to develop its implications for our analysis of ethical leadership. Along with Nietzsche, MacIntyre rejects the Enlightenment view of ethics as rational action based on duty or rules (deontological) or the greatest happiness for the largest number (utilitarianism or consequenti- alism). Accepting Nietzsche's demystification of Enlightenment morality on the basis that its rational foundation is nothing more than a mask for the expression or assertion of subjective will (the will to power), MacIntyre (1991: 114) argues that 'there can be no place for such fictions as natural rights, utility, the greatest happiness of the greatest number'. We have then to abandon reason in favour of the will - a will that relentlessly seeks to reinvent itself in pursuit of a morality that is wholly original to the self and not simply compliance to some tradition. It is much less concerned with what rules an individual ought to obey and why s(he) should obey them than with what kind of a person should I become, and how I should live my life - an inescapably practical question, which Enlightenment morality fails to address directly (MacIntyre 1991: 118). Recognizing that Nietzsche's genius has been simply to identify the problem rather than the solution (e.g. the Ubermensch (Superman)), MacIntyre returns to Aristotelian ethics and its concern with the virtues and telos. He believes that Nietzsche was right to claim that the Enlightenment philosophers were unable to chal- lenge his thesis that morality was little more than a disguise of the will to power, but MacIntyre is convinced that this failure was an inevitable consequence of their rejecting the 'Aristotelian tradition'. This has meant that rules have displaced moral character or the good life to the extent that 'qualities of character then generally come to be prized only because they lead us to follow the right set of rules' (MacIntyre 1991: 119). In a post-Nietzschean world, all rational groundings of morality fail but MacIntyre (117) believes that the one escape from this moral nihilism is a return to Aristotle's virtues. Furthermore, these virtues are what promote community values and solidarity, not those that express heroism in the liberal individualistic sense of that term. For Aristotle, a hero is not someone who simply secures the approval of others because of her or his achievements; heroism and the honour attached to it is attributed to those who exercise virtues that sustain a social role or excellence in some social practice. These virtues return us to a pre-modern mode of civilization, where possessive or competitive individualism and a preoccupation with the self that is the legacy of the Enlightenment are unknown. There is no sense of a separation of individual and society because human behaviour is never merely an individual acting in his or her own self-interests but a reflection of what it means to be a member of that society. Of course, contemporary econom- ic self-interest and the pursuit of fame and glory are equally reflections of what it is to be a member of our society. But in contemporary society, the competitive pursuit of individual success trans- cends any moral obligation to live the good life and seek excellence for its own sake rather than for personal material and symbolic reward. Our concern here is to challenge the individualized identity that is imposed upon us through the exercise of power in contemporary society. This encourages the preoccupation with a self that secures itself principally through social confirma- tions that rely on the acquisition and maintenance of celebrated material and symbolic images. Summary and conclusion We began this paper with a discussion of the recent corporate scandals, in particular the Irish banking scandals at NIB and AIB. Drawing on various High Court and Tribunal reports, we suggested that a plausible explanation for the corruption is a failure of ethical leadership. Leaders at NIB and AIB created a culture that emphasized financial performance, targets and individual and corporate success and leaders either engaged directly in unethical practices, ignored the unethical practices of employees when it was brought to their attention, or failed to provide adequate support or training, let alone ethical guidance, for employees. We then con- sidered these banking scandals in the wider social and political context and, in particular, the financial misconduct of the Irish Prime Minister, Charles J. Haughey. In the remainder of this paper, we argued that the failure in ethical leadership has been at least partly because of the preoccupation with self that is the legacy of the Enlightenment and humanistic thinking on autonomy. We argued that the recent corporate scandals could be seen as resulting from ethical failures arising from contemporary con- cerns with material and symbolic success, which reside in and reinforce an ultimate preoccupation with the self. We examined both the leadership and ethical leadership literature to show how it has tended to mirror and reproduce an individua- listic discourse that sustains a preoccupation with the self. Finally, we proposed that a MacIntyre- inspired Aristotelian virtue ethics, wherein virtues promote community values and solidarity rather than heroism in the liberal individualistic sense of that term, offers a possibility for challenging the preoccupation with the self and thereby unethical leadership. Note 1. DIRT is a self-assessment tax and under Section 258 of the Taxes Consolidation Act, 1997, financial institutions have a statutory obligation to deduct DIRT from any 'relevant interest' paid to a depositor, to pay it over to the Revenue and to make a return on a prescribed form. References Arjoon, S. 2000. 'Virtue theory as a dynamic theory of business'. Journal of Business Ethics, 28:2, 159-178. 365 Business Ethics: A European Review Bennis, W. and Nanus, B. 1985. Leaders: Strategies for Taking Charge. New York, NY: Harper and Row. Brien, A. 1998. 'Professional ethics and the culture of trust'. Journal of Business Ethics, 17:4, 391- 409. Bryman, A. 1986. Leadership and Organisation. London: Routledge. Burns, J.M. 1978. Leadership. New York: Harper & Row. Fiedler, F.E. 1967. A Theory of Leadership Effective- ness. New York: McGraw-Hill . Foucault, M. 1994. 'What is Enlightenment?'. In Rabinow, P. (Ed.), Michel Foucault, ethics: essential works: Ethics Vol. 1: 305-320. Harmondsworth: Penguin. Gold, S.J. 2005. 'Critical theory, game theory, and the MBA business ethics course'. Presented at the 4th International Critical Management Studies Confer- ence, Cambridge, July 4-6. Grint, K. 2000. The Arts of Leadership. Oxford: Oxford University Press. High Court. 2004. Report on the Investigation of the Affairs of National Irish Bank PLC and National Irish Bank Financial Services PLC by Blayney, J. and Grace, T. Kerrigan, G. and Brennan, P. 1999. This Great Little Nation. Malaysia: Gill and Macmillan. Knights, D. and Willmott, H.C. 2002. 'Virtue or vice? Reflecting on competing discourses of autonomy'. In Parker, M. (Ed.), Utopia and Organization: 59-81. London: Sage. Levinas, E. 1986. In Cohen, R.A. (Ed.), Face to Face with Levinas. Albany, NY: State University of New York Press. Likert, R. 1961. New Patterns of Management. New York, NY: McGraw-Hill. MacIntyre, A. 1991. After Virtue. London: Duck- worth. Molyneaux, D. 2003. 'Blessed are the meek, for they shall inherit the earth: an aspiration applicable to business?' Journal of Business Ethics, 48:4, 347-363. Morrison, A. 2001. 'Integrity and global leadership'. Journal of Business Ethics, 31:1, 65-76. Stephens, L. 1882. The Science of Ethics: 155. G.P. Putnam's & Sons. Stodgill, R.M. 1974/6. Handbook of Leadership. New York, NY: Free Press. Takala, T. 1998. 'Plato on leadership'. Journal of Business Ethics, 17:7, 785-798. Goleman, D. (1998). What makes a leader? Harvard Business Review, 76(6), 93102. Title: What Makes a Leader? By: Goleman, Daniel, Harvard Business Review, 00178012, Nov/Dec98, Vol. 76, Issue 6 Database: Business Source Complete WHAT MAKES A LEADER? DANIEL GOLEMAN Superb leaders have very different ways of directing a team, a division, or a company. Some are subdued and analytical; others are charismatic and go with their gut. And different situations call for different types of leadership. Most mergers need a sensitive negotiator at the helm, whereas many turnarounds require a more forceful kind of authority. Psychologist and noted author Daniel Goleman has found, however, that effective leaders are alike in one crucial way: they all have a high degree of what has come to be known as emotional intelligence. In fact, Goleman's research at nearly 200 large, global companies revealed that emotional intelligence- especially at the highest levels of a company- is the sine qua non for leadership. Without it, a person can have first-class training, an incisive mind, and an endless supply of good ideas, but he still won't make a great leader. The components of emotional intelligence- self-awareness, self-regulation, motivation, empathy, and social skill-can sound un-businesslike. But exhibiting emotional intelligence at the workplace does not mean simply controlling your anger or getting along with people. Rather, it means understanding your own and other people's emotional makeup well enough to move people in the direction of accomplishing your company's goals. In this article, the author discusses each component of emotional intelligence and shows through examples how to recognize it in potential leaders, how and why it leads to measurable business results, and how it can be learned. It takes time and, most of all, commitment. But the benefits that come from having a well-developed emotional intelligence, both for the individual and the organization, make it worth the effort. EVERY BUSINESSPERSON knows a story about a highly intelligent, highly skilled executive who was promoted into a leadership position only to fail at the job. And they also know a story about someone with solid-but not extraordinary-intellectual abilities and technical skills who was promoted into a similar position and then soared. Such anecdotes support the widespread belief that identifying individuals with the "right stuff" to be leaders is more art than science. After all, the personal styles of superb leaders vary: some leaders are subdued and analytical; others shout their manifestos from the mountaintops. And just as important, different situations call for different types of leadership. Most mergers need a sensitive negotiator at the helm, whereas many turnarounds require a more forceful authority. I have found, however, that the most effective leaders are alike in one crucial way: they all have a high degree of what has come to be known as emotional intelligence. It's not that IQ and technical skills are irrelevant. They do matter, but mainly as "threshold capabilities"; that is, they are the entry-level requirements for executive positions. But my research, along with other recent studies, clearly shows that emotional intelligence is the sine qua non of leadership. Without it, a person can have the best training in the world, an incisive, analytical mind, and an endless supply of smart ideas, but he still won't make a great leader. In the course of the past year, my colleagues and I have focused on how emotional intelligence operates at work. We have examined the relationship between emotional intelligence and effective performance, especially in leaders. And we have observed how emotional intelligence shows itself on the job. How can you tell if someone has high emotional intelligence, for example, and how can you recognize it in yourself? In the following pages, we'll explore these questions, taking each of the components of emotional intelligence-selfawareness, self-regulation, motivation, empathy, and social skill-in turn. Evaluating Emotional Intelligence Most large companies today have employed trained psychologists to develop what are known as "competency models" to aid them in identifying, training, and promoting likely stars in the leadership firmament. The psychologists have also developed such models for lower-level positions. And in recent years, I have analyzed competency models from 188 companies, most of which were large and global and included the likes of Lucent Technologies, British Airways, and Credit Suisse. In carrying out this work, my objective was to determine which personal capabilities drove outstanding performance within these organizations, and to what degree they did so. I grouped capabilities into three categories: purely technical skills like accounting and business planning; cognitive abilities like analytical reasoning; and competencies demonstrating emotional intelligence such as the ability to work with others and effectiveness in leading change. To create some of the competency models, psychologists asked senior managers at the companies to identify the capabilities that typified the organization's most outstanding leaders. To create other models, the psychologists used objective criteria such as a division's profitability to differentiate the star performers at senior levels within their organizations from the average ones. Those individuals were then extensively interviewed and tested, and their capabilities were compared. This process resulted in the creation of lists of ingredients for highly effective leaders. The lists ranged in length from 7 to 15 items and included such ingredients as initiative and strategic vision. When I analyzed all this data, I found dramatic results. To be sure, intellect was a driver of outstanding performance. Cognitive skills such as big-picture thinking and long-term vision were particularly important. But when I calculated the ratio of technical skills, IQ, and emotional intelligence as ingredients of excellent performance, emotional intelligence proved to be twice as important as the others for jobs at all levels. Moreover, my analysis showed that emotional intelligence played an increasingly important role at the highest levels of the company, where differences in technical skills are of negligible importance. In other words, the higher the rank of a person considered to be a star performer, the more emotional intelligence capabilities showed up as the reason for his or her effectiveness. When I compared star performers with average ones in senior leadership positions, nearly 90% of the difference in their profiles was attributable to emotional intelligence factors rather than cognitive abilities. Other researchers have confirmed that emotional intelligence not only distinguishes outstanding leaders but can also be linked to strong performance. The findings of the late David McClelland, the renowned researcher in human and organizational behavior, are a good example. In a 1996 study of a global food and beverage company, McClelland found that when senior managers had a critical mass of emotional intelligence capabilities, their divisions outperformed yearly earnings goals by 20%. Meanwhile, division leaders without that critical mass underperformed by almost the same amount. McClelland's findings, interestingly, held as true in the company's U.S. divisions as in its divisions in Asia and Europe. In short, the numbers are beginning to tell us a persuasive story about the link between a company's success and the emotional intelligence of its leaders. And just as important, research is also demonstrating that people can, if they take the right approach, develop their emotional intelligence. (See the insert "Can Emotional Intelligence Be Learned?") Self-Awareness Self-awareness is the first component of emotional intelligence-which makes sense when one considers that the Delphic oracle gave the advice to "know thyself" thousands of years ago. Self-awareness means having a deep understanding of one's emotions, strengths, weaknesses, needs, and drives. People with strong self-awareness are neither overly critical nor unrealistically hopeful. Rather, they are honest-with themselves and with others. People who have a high degree of self-awareness recognize how their feelings affect them, other people, and their job performance. Thus a self-aware person who knows that tight deadlines bring out the worst in him plans his time carefully and gets his work done well in advance. Another person with high self-awareness will be able to work with a demanding client. She will understand the client's impact on her moods and the deeper reasons for her frustration. "Their trivial demands take us away from the real work that needs to be done," she might explain. And she will go one step further and turn her anger into something constructive. Self-awareness extends to a person's understanding of his or her values and goals. Someone who is highly self-aware knows where he is headed and why; so, for example, he will be able to be firm in turning down a job offer that is tempting financially but does not fit with his principles or long-term goals. A person who lacks self-awareness is apt to make decisions that bring on inner turmoil by treading on buried values. "The money looked good so I signed on," someone might say two years into a job, "but the work means so little to me that I'm constantly bored." The decisions of self-aware people mesh with their values; consequently, they often find work to be energizing. How can one recognize self-awareness? First and foremost, it shows itself as candor and an ability to assess oneself realistically. People with high self-awareness are able to speak accurately and openly- although not necessarily effusively or confessionally-about their emotions and the impact they have on their work. For instance, one manager I know of was skeptical about a new personal-shopper service that her company, a major department-store chain, was about to introduce. Without prompting from her team or her boss, she offered them an explanation: "It's hard for me to get behind the rollout of this service," she admitted, "because I really wanted to run the project, but I wasn't selected. Bear with me while I deal with that." The manager did indeed examine her feelings; a week later, she was supporting the project fully. Such self-knowledge often shows itself in the hiring process. Ask a candidate to describe a time he got carried away by his feelings and did something he later regretted. Self-aware candidates will be frank in admitting to failure- and will often tell their tales with a smile. One of the hallmarks of self-awareness is a self-deprecating sense of humor. Self-awareness can also be identified during performance reviews. Self-aware people knowand are comfortable talking about-their limitations and strengths, and they often demonstrate a thirst for constructive criticism. By contrast, people with low self-awareness interpret the message that they need to improve as a threat or a sign of failure. Self-aware people can also be recognized by their self-confidence. They have a firm grasp of their capabilities and are less likely to set themselves up to fail by, for example, overstretching on assignments. They know, too, when to ask for help. And the risks they take on the job are calculated. They won't ask for a challenge that they know they can't handle alone. They'll play to their strengths. Consider the actions of a midlevel employee who was invited to sit in on a strategy meeting with her company's top executives. Although she was the most junior person in the room, she did not sit there quietly, listening in awestruck or fearful silence. She knew she had a head for clear logic and the skill to present ideas persuasively, and she offered cogent suggestions about the company's strategy. At the same time, her self-awareness stopped her from wandering into territory where she knew she was weak. Despite the value of having self-aware people in the workplace, my research indicates that senior executives don't often give self-awareness the credit it deserves when they look for potential leaders. Many executives mistake candor about feelings for "wimpiness" and fail to give due respect to employees who openly acknowledge their shortcomings. Such people are too readily dismissed as "not tough enough" to lead others. In fact, the opposite is true. In the first place, people generally admire and respect candor. Further, leaders are constantly required to make judgment calls that require a candid assessment of capabilities-their own and those of others. Do we have the management expertise to acquire a competitor? Can we launch a new product within six months? People who assess themselves honestly-that is, self-aware people-are well suited to do the same for the organizations they run. Self-Regulation Biological impulses drive our emotions. We cannot do away with them-but we can do much to manage them. Self-regulation, which is like an ongoing inner conversation, is the component of emotional intelligence that frees us from being prisoners of our feelings. People engaged in such a conversation feel bad moods and emotional impulses just as everyone else does, but they find ways to control them and even to channel them in useful ways. Imagine an executive who has just watched a team of his employees present a botched analysis to the company's board of directors. In the gloom that follows, the executive might find himself tempted to pound on the table in anger or kick over a chair. He could leap up and scream at the group. Or he might maintain a grim silence, glaring at everyone before stalking off. But if he had a gift for self-regulation, he would choose a different approach. He would pick his words carefully, acknowledging the team's poor performance without rushing to any hasty judgment. He would then step back to consider the reasons for the failure. Are they personala lack of effort? Are there any mitigating factors? What was his role in the debacle? After considering these questions, he would call the team together, lay out the incident's consequences, and offer his feelings about it. He would then present his analysis of the problem and a well considered solution. Why does self-regulation matter so much for leaders? First of all, people who are in control of their feelings and impulses- that is, people who are reasonable-are able to create an environment of trust and fairness. In such an environment, politics and infighting are sharply reduced and productivity is high. Talented people flock to the organization and aren't tempted to leave. And self-regulation has a trickle-down effect. No one wants to be known as a hothead when the boss is known for her calm approach. Fewer bad moods at the top mean fewer throughout the organization. Second, self-regulation is important for competitive reasons. Everyone knows that business today is rife with ambiguity and change. Companies merge and break apart regularly. Technology transforms work at a dizzying pace. People who have mastered their emotions are able to roll with the changes. When a new change program is announced, they don't panic; instead, they are able to suspend judgment, seek out information, and listen to executives explain the new program. As the initiative moves forward, they axe able to move with it. Sometimes they even lead the way. Consider the case of a manager at a large manufacturing company. Like her colleagues, she had used a certain software program for five years. The program drove how she collected and reported data and how she thought about the company's strategy. One day, senior executives announced that a new program was to be installed that would radically change how information was gathered and assessed within the organization. While many people in the company complained bitterly about how disruptive the change would be, the manager mulled over the reasons for the new program and was convinced of its potential to improve performance. She eagerly attended training sessionssome of her colleagues refused to do so- and was eventually promoted to run several divisions, in part because she used the new technology so effectively. I want to push the importance of self-regulation to leadership even further and make the case that it enhances integrity, which is not only a personal virtue but also an organizational strength. Many of the bad things that happen in companies are a function of impulsive behavior. People rarely plan to exaggerate profits, pad expense accounts, dip into the till, or abuse power for selfish ends. Instead, an opportunity presents itself, and people with low impulse control just say yes. By contrast, consider the behavior of the senior executive at a large food company. The executive was scrupulously honest in his negotiations with local distributors. He would routinely lay out his cost structure in detail, thereby giving the distributors a realistic understanding of the company's pricing. This approach meant the executive couldn't always drive a hard bargain. Now, on occasion, he felt the urge to increase profits by withholding information about the company's costs. But he challenged that impulse-he saw that it made more sense in the long run to counteract it. His emotional self regulation paid off in strong, lasting relationships with distributors that benefited the company more than any short-term financial gains would have. The signs of emotional self-regulation, therefore, are not hard to miss: a propensity for reflection and thoughtfulness; comfort with ambiguity and change; and integrity-an ability to say no to impulsive urges. Like self-awareness, self-regulation often does not get its due. People who can master their emotions are sometimes seen as cold fish-their considered responses are taken as a lack of passion. People with fiery temperaments are frequently thought of as "classic" leaders-their outbursts are considered hallmarks of charisma and power. But when such people make it to the top, their impulsiveness often works against them. In my research, extreme displays of negative emotion have never emerged as a driver of good leadership. Motivation If there is one trait that virtually all effective leaders have, it is motivation. They are driven to achieve beyond expectations-their own and everyone else's. The key word here is achieve. Plenty of people are motivated by external factors such as a big salary or the status that comes from having an impressive title or being part of a prestigious company. By contrast, those with leadership potential are motivated by a deeply embedded desire to achieve for the sake of achievement. If you are looking for leaders, how can you identify people who are motivated by the drive to achieve rather than by external rewards? The first sign is a passion for the work itself-such people seek out creative challenges, love to learn, and take great pride in a job well done. They also display an unflagging energy to do things better. People with such energy often seem restless with the status quo. They are persistent with their questions about why things are done one way rather than another; they are eager to explore new approaches to their work. A cosmetics company manager, for example, was frustrated that he had to wait two weeks to get sales results from people in the field. He finally tracked down an automated phone system that would beep each of his salespeople at 5 P.M. every day. An automated message then prompted them to punch in their numbers-how many calls and sales they had made that day. The system shortened the feedback time on sales results from weeks to hours. That story illustrates two other common traits of people who are driven to achieve. They are forever raising the performance bar, and they like to keep score. Take the performance bar first. During performance reviews, people with high levels of motivation might ask to be "stretched" by their superiors. Of course, an employee who combines self-awareness with internal motivation will recognize her limits-but she won't settle for objectives that seem too easy to fulfill. And it follows naturally that people who are driven to do better also want a way of tracking progress-their own, their team's, and their company's. Whereas people with low achievement motivation are often fuzzy about results, those with high achievement motivation often keep score by tracking such hard measures as profitability or market share. I know of a money manager who starts and ends his day on the Internet, gauging the performance of his stock hand against four industry-set benchmarks. Interestingly, people with high motivation remain optimistic even when the score is against them. In such cases, self-regulation combines with achievement motivation to overcome the frustration and depression that come after a setback or failure. Take the case of an another portfolio manager at a large investment company. After several successful years, her fund tumbled for three consecutive quarters, leading three large institutional clients to shift their business elsewhere. Some executives would have blamed the nosedive on circumstances outside their control; others might have seen the setback as evidence of personal failure. This portfolio manager, however, saw an opportunity to prove she could lead a turnaround. Two years later, when she was promoted to a very senior level in the company, she described the experience as "the best thing that ever happened to me; I learned so much from it." Executives trying to recognize high levels of achievement motivation in their people can look for one last piece of evidence: commitment to the organization. When people love their job for the work itself, they often feel committed to the organizations that make that work possible. Committed employees are likely to stay with an organization even when they are pursued by headhunters waving money. It's not difficult to understand how and why a motivation to achieve translates into strong leadership. If you set the performance bar high for yourself, you will do the same for the organization when you are in a position to do so. Likewise, a drive to surpass goals and an interest in keeping score can be contagious. Leaders with these traits can often build a team of managers around them with the same traits. And of course, optimism and organizational commitment are fundamental to leadership-just try to imagine running a company without them. Empathy Of all the dimensions of emotional intelligence, empathy is the most easily recognized. We have all felt the empathy of a sensitive teacher or friend; we have all been struck by its absence in an unfeeling coach or boss. But when it comes to business, we rarely hear people praised, let alone rewarded, for their empathy. The very word seems un-businesslike, out of place amid the tough realities of the marketplace. But empathy doesn't mean a kind of "I'm okay, you're okay" mushiness. For a leader, that is, it doesn't mean adopting other people's emotions as one's own and trying to please everybody. That would be a nightmare-it would make action impossible. Rather, empathy means thoughtfully considering employees' feelings- along with other factors-in the process of making intelligent decisions. For an example of empathy in action, consider what happened when two giant brokerage companies merged, creating redundant jobs in all their divisions. One division manager called his people together and gave a gloomy speech that emphasized the number of people who would soon be fired. The manager of another division gave his people a different kind of speech. He was upfront about his own worry and confusion, and he promised to keep people informed and to treat everyone fairly. The difference between these two managers was empathy. The first manager was too worried about his own fate to consider the feelings of his anxiety stricken colleagues. The second knew intuitively what his people were feeling, and he acknowledged their fears with his words. Is it any surprise that the first manager saw his division sink as many demoralized people, especially the most talented, departed? By contrast, the second manager continued to be a strong leader, his best people stayed, and his division remained as productive as ever. Empathy is particularly important today as a component of leadership for at least three reasons: the increasing use of teams; the rapid pace of globalization; and the growing need to retain talent. Consider the challenge of leading a team. As anyone who has ever been a part of one can attest, teams are cauldrons of bubbling emotions. They are often charged with reaching a consensus-hard enough with two people and much more difficult as the numbers increase. Even in groups with as few as four or five members, alliances form and clashing agendas get set. A team's leader must be able to sense and understand the viewpoints of everyone around the table. That's exactly what a marketing manager at a large information technology company was able to do when she was appointed to lead a troubled team. The group was in turmoil, overloaded by work and missing deadlines. Tensions were high among the members. Tinkering with procedures was not enough to bring the group together and make it an effective part of the company. So the manager took several steps. In a series of one-on-one sessions, she took the time to listen to everyone in the group say what was frustrating them, how they rated their colleagues, whether they felt they had been ignored. And then she directed the team in a way that brought it together: she encouraged people to speak more openly about their frustrations, and she helped people raise constructive complaints during meetings. In short, her empathy allowed her to understand her team's emotional makeup. The result was not just heightened collaboration among members but also added business, as the team was called on for help by a wider range of internal clients. Globalization is another reason for the rising importance of empathy for business leaders. Cross-cultural dialogue can easily lead to miscues and misunderstandings. Empathy is an antidote. People who have it are attuned to subtleties in body language; they can hear the message beneath the words being spoken. Beyond that, they have a deep understanding of the existence and importance of cultural and ethnic differences. Consider the case of an American consultant whose team had just pitched a project to a potential Japanese client. In its dealings with Americans, the team was accustomed to being bombarded with questions after such a proposal, but this time it was greeted with a long silence. Other members of the team, taking the silence as disapproval, were ready to pack and leave. The lead consultant gestured them to stop. Although he was not particularly familiar with Japanese culture, he read the client's face and posture and sensed not rejection but interest-even deep consideration. He was right: when the client finally spoke, it was to give the consulting firm the job. Finally, empathy plays a key role in the retention of talent, particularly in today's information economy. Leaders have always needed empathy to develop and keep good people, but today the stakes are higher. When good people leave, they take the company's knowledge with them. That's where coaching and mentoring come in. It has repeatedly been shown that coaching and mentoring pay off not just in better performance but also in increased job satisfaction and decreased turnover. But what makes coaching and mentoring work best is the nature of the relationship. Outstanding coaches and mentors get inside the heads of the people they are helping. They sense how to give effective feedback. They know when to push for better performance and when to hold back. In the way they motivate their proteges, they demonstrate empathy in action. In what is probably sounding like a refrain, let me repeat that empathy doesn't get much respect in business. People wonder how leaders can make hard decisions if they are "feeling" for all the people who will be affected. But leaders with empathy do more than sympathize with people around them: they use their knowledge to improve their companies in subtle but important ways. Social Skill The first three components of emotional intelligence are all self-management skills. The last two, empathy and social skill, concern a person's ability to manage relationships with others. As a component of emotional intelligence, social skill is not as simple as it sounds. It's not just a matter of friendliness, although people with high levels of social skill are rarely meanspirited. Social skill, rather, is friendliness with a purpose: moving people in the direction you desire, whether that's agreement on a new marketing strategy or enthusiasm about a new product. Socially skilled people tend to have a wide circle of acquaintances, and they have a knack for finding common ground with people of all kinds-a knack for building rapport. That doesn't mean they socialize continually; it means they work according to the assumption that nothing important gets done alone. Such people have a network in place when the time for action comes. Social skill is the culmination of the other dimensions of emotional intelligence. People tend to be very effective at managing relationships when they can understand and control their own emotions and can empathize with the feelings of others. Even motivation contributes to social skill. Remember that people who are driven to achieve tend to be optimistic, even in the face of setbacks or failure. Wh