Transcript Entrepreneurship: Chapter 11

Entrepreneurship and Small
Business Management
Chapter 20
Leadership and Ethical Practices
Ch. 20 Performance Objectives
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Identify leadership styles.
Organize for effective time
management.
Pursue ethical leadership to build an
ethical organization.
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Ch. 20 Performance Objectives
(continued)
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Make sure your business is run in an
ethical manner.
Maintain your integrity.
Incorporate social responsibility into
your company.
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A Leader…
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Gets things done through influence
by guiding or inspiring others to
voluntarily participate in a cause
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Has self-esteem
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Inspires confidence in others
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Thinks positively
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Leadership Styles
Coercive—pressure/commanding approach
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Pro: effective in disasters or with employees
who need forceful management
Con: hurts employee morale and creativity
Authoritative—leader sets goal but allows
process flexibility (“come with me” approach)
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Pro: works well if the leader is an expert
Con: not effective if the leader is not an
expert and is trying to lead people who are
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Leadership Styles (continued)
Affiliative—”people come first” approach
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Pro: gets employees on board
Con: can fail to give adequate direction
Democratic—gives employees strong voice in
company
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Pro: builds morale
Con: can result in endless meetings and
stagnation
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Leadership Styles (continued)
Pacesetting—sets high standards for self, and
challenges employees to meet them, too
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Pro: great when employees are self-motivated
Con: can overwhelm less committed employees
Coaching—focuses on helping employees learn
and grow
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Pro: good approach with new employees
Con: may not work with long-term employees
who are resistant to change
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How Will You Pay Yourself?
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Commission
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Salary
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Fixed amount of money paid at set intervals
Fixed operating cost (does not change with sales)
Wage
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A set percentage of every sale
Variable operating cost (fluctuates with sales)
Fixed amount per hour
Cost of goods sold (COGS)
Dividend—share of company profits deducted from
net profit (after taxes)
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Manage Time Wisely
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Time Management Tips
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Prioritize; know what’s important
Set realistic daily goals; allow for flexibility
Check e-mail a limited number of times a day
Avoid distractions from electronic devices
Try stand-up meetings
Accept meeting invitations when your
presence is required for progress
Delegate responsibility and authority
Allow for downtime and creative-thinking time
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Ethical Leadership in Organizations
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Ethics—principles that define a code of
behavior to distinguish between right & wrong
Your values and behavior set the ethical tone
for your company.
A behavior may be legal but still not ethical.
Customers return to businesses that treat them
ethically.
Employees who feel used by their employers
will not do their best work.
To build an ethical organization, values and
standards of conduct must be clearly defined.
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Establishing Ethical Standards
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Code of ethics—a statement of the
company’s values
Code of conduct—set of official standards
of employee behavior
Code of ethics and business conduct—
combines the written statement of values
with the official standards of employee
behavior
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Six Pillars of Character
Value
Actualized Form
Trustworthiness Honesty, integrity, reliability (promise-keeping),
loyalty
Respect
Civility, courtesy, decency, dignity, autonomy,
tolerance, acceptance
Responsibility
Accountability, pursuit of excellence, self-restraint
Caring
Concern for others, compassion, benevolence,
altruism
Fairness
Process (open and impartial), impartiality, equity
Citizenship
Law abiding, volunteerism, environmental
awareness, action
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Making Sure Your Business is Run
in an Ethical Manner
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Give employees the opportunity to learn,
understand, and adopt the code of ethics as
part of their formal training and orientation.
Implement methods to collect information
and make changes.
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Open communications
“Tip line” or “tip box” to identify ethical problems
Protection for whistle-blowers
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Corporate Ethical Scandals
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Companies that published false financial statements,
inflating their earnings and misleading investors:
 Enron
 WorldCom-MCI
 Tyco
 Global Crossing
Stock investors and employees with retirement funds
in company stock lost millions of dollars.
These scandals were failures of corporate governance:
there were no rules or safeguards in place to ensure
that executives behaved legally and ethically.
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Corporate Governance
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Do not treat company profits as personal
funds. Choose a wage, salary, or dividend
arrangement and document it.
Keep accurate financial records and have
them checked once a year by a reputable
accountant.
Use financial controls.
Create an advisory board of people with
strong ethics.
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Maintaining Your Integrity
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Integrity—upholding behavioral standards
All codes of ethics and conduct are worthless
without the integrity to put words into action.
Acting ethically is not something done only when
convenient or not costly.
Integrity is a daily, decision-by-decision process.
Maintain compliance with government laws by
staying up-to-date on regulation changes.
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Encourage Social Responsibility
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Recycle in the office.
Donate a portion of business profits to a
charity that employees support.
Refuse to use animals for testing products.
Offer employees incentives to volunteer in
their communities.
Establish a safe, healthy workplace.
Emphasize being a sustainable business.
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