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CHAPTER 14: SHAPING CULTURE AND VALUES 439
that are generally accepted in society and are enforceable in the courts. Ethical
standards for the most part apply to behavior not covered by law. Although cur-

rent laws often reflect minimum moral standards, not all moral standards are

codified into law. The morality of aiding a drowning person, for example, is not
specifi ed by law.
The standards for ethical conduct are embodied within each employee as
well as within the organization itself. In a survey about unethical conduct in the
workplace, more than half of the respondents cited poor leadership as a factor. 58
Leaders can create and sustain a climate that emphasizes ethical behavior for all
employees.

Values-Based Leadership

Ethical values in organizations are developed and strengthened primarily through
values-based leadership, a relationship between leaders and followers that is based Values-based leadership
Values-based leadership
a relationship between leaders
on shared, strongly internalized values that are advocated and acted upon by a relationship between leaders
and followers that is based on
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the leader. Leaders infl uence ethical values through their personal ethics and and followers that is based on
shared, strongly internalized
shared, strongly internalized
spiritual leadership. These leaders give meaning to followers by connecting their values that are advocated and
values that are advocated and
acted upon by the leader
deeply held values to organizational goals. acted upon by the leader
Personal Ethics
Employees learn about values from watching leaders. Values-based leaders gen-
erate a high level of trust and respect from employees, based not just on stated

values, but on the courage, determination, and self-sacrifice they demonstrate in
upholding those values. When leaders are willing to make personal sacri-
fices for the sake of values, employees become more willing to do

so. John Mackey, CEO of Whole Foods Markets, recently slashed Action Memo
his salary to $1 a year. Mackey has never believed top executives Answering the questions in Leader’s Self-
should take huge salaries while employees are paid a paltry wage, Insight 14.4 on the following page will give
and he advocates finding meaning in one’s work and making a you an idea of how you feel about some

contribution to society. When asked about his decision to take the ethical issues that students typically face.
salary cut, Mackey said he just felt like it was the right thing to do
because he had enough money and wanted his motivation to come
primarily from serving others. 60
For organizations to be ethical, leaders need to be openly and strongly com-
mitted to ethical conduct. In addition, ethical leaders uphold their commitment to

values during difficult times or crises, as illustrated by the example of Bill Greehey
at Valero.

IN THE LEAD Bill Greehey, Valero
When Hurricane Katrina hit New Orleans in late August of 2005, companies through-
out the region set their disaster plans into action. But few matched the heroic
efforts put forth by employees at Valero’s St. Charles oil refi nery. Just eight days
after the storm, the St. Charles facility was up and running, whereas a competitor’s
plant across the road was weeks away from getting back online. During the same
time period, St. Charles’s disaster crew managed to locate every one of the plant’s
570 employees.
Part of the credit goes to Valero’s culture, which includes ethical values of caring,
honesty, trust, and doing the right thing. Valero’s culture has given the company a
distinctive edge during an era of cutthroat global competition in the oil industry. As
CEO Bill Greehey transformed Valero, once primarily a natural-gas-pipeline company,