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164 PART 3: THE PERSONAL SIDE OF LEADERSHIP
the third element, spirit—on the ability to look within, to contemplate the human
condition, to think about what is right and wrong, to see what really matters in
the world, and to have the courage to stand up for what is worthy and right. We
begin by examining the situation in which most organizations currently operate,
the dilemma leaders face in the modern world, and the kinds of behaviors that
often contribute to an unethical organizational climate. Next we explore how
leaders can act in a moral way, examine a model of personal moral development,
and look at the importance of stewardship and servant leadership. The fi nal sec-
tions of the chapter explore what courage means and how leaders develop the
courage for moral leadership to fl ourish.

Moral Leadership Today

Every decade sees its share of political, social, and corporate villains, but
the pervasiveness of ethical lapses in recent years has been astounding. In the
political arena, U.S. Representative Mark Foley resigned amid allegations that
he engaged in sexually explicit online chats with congressional pages. Russia’s
telecom minister is on the hot seat over charges that he owns huge chunks of
the industry he oversees, having surreptitiously converted telecom businesses
from state ownership. The U.S. Army is still dealing with the fallout from
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the Abu Ghraib prisoner abuse scandal, and the U.S. Air Force has canceled a
$26 billion deal to lease tankers from Boeing Corp. after learning that a former
procurement offi cer favored Boeing in contracts in order to get hired by the
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aerospace company. The names of once-revered corporations have become syn-
onymous with greed, deceit, and fi nancial chicanery: Enron, Adelphia, Arthur
Andersen, HealthSouth, WorldCom, Tyco. Recently, the CEO of giant health in-
surer UnitedHealth Group resigned under pressure after an outside probe found
that he was involved in issuing millions of backdated stocks that benefi tted
himself and other executives. No wonder a CBS poll found that 79 percent
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of respondents believe questionable business practices are widespread and less
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than one-third think most CEOs are honest. Harvard Business School professor
and author Shoshana Zuboff describes the impact of these public sentiments:
“The chasm between individuals and organizations is marked by frustration,
mistrust, disappointment, and even rage.” 6

The Ethical Climate in U.S. Business
Ethical lapses occur at all levels of organizations, but top leaders in particu-
lar are facing closer scrutiny in light of recent unethical and illegal actions.
What’s going on at the top trickles down through organizations and society.
When leaders fail to set and live up to high ethical standards, organizations,
employees, shareholders, and the general public suffer. Unethical
Action Memo
and illegal behavior can lead to serious consequences for orga-
nizations. For one thing, companies have a hard time attracting
As a leader, you can put moral values
good employees. Evidence shows that the recent wave of scandals
into action and set the example you
has prompted job seekers to go to great lengths to check out com-
want followers to live by. You can resist
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panies’ ethical standards. When current employees lose trust in
pressures to act unethically just to avoid
leaders, morale, commitment, and performance suffer. Customers
criticism or achieve short-term gains.
who lose trust in the organization will bolt, as evidenced by the
mass desertion of Arthur Andersen after the fi rm was found guilty