Leadership in Carillion – Part 1

Preface

The following is the first half of a case-study written for my Leadership in Contemporary Organisations assignment. References will be included in part 2.

Introduction

Within any organisation there is leadership. Leadership is not only, as commonly thought, from the senior members of the organisation, but can be found in every member of staff, from the very top to the most junior member.

When leading an organisation how you behave and particularly how you react to crisis’ that occur can be considered one of the highlights for leadership (Barton et al, n.d). It should be noted however that there is no clear definition of a leader, and that depending on your point of view a person could be a good leader or a bad leader (Bennis, 2007).

The collapse of Carillion at the start of 2018 has been significant, not only for inciting public discussion of governance of large companies, but also role the role which the senior leadership team played.

This essay begins by looking at the literature on ethical leaders, before moving onto bad, toxic and destructive leadership. The leadership within Carilion leading up to the collapse and the behaviour of the senior management team is explored and compared to the literature. Based on their behaviour before, during and after the collapse it’s considered that Carillion’s leadership team are examples of destructive leaders. Particularly given the treatment of the company’s pension contributions, or in this case the lack of them, with the senior management team instead preferring to provide money towards dividends with an eye on their own benefits and bonuses.

Literature Review - Ethical and Bad Leadership

Ethical Leadership

Brown et al (2005) states that leaders are a key source of guidance in ethical manners for their employees, and in an what can be considered an echo of the past, indicates that little has changed since their study took place and now, “concerns about ethics and leadership have dominated recent headlines about business and shaken public confidence in many organizations” (Brown et al, 2005, p. 132), indeed the many corporate scandals that have occurred has led to an increased interest in the ethical standards prevalent through the corporate world (Skubinn and Herzog, 2016).

Ethical leadership, as suggested by Ciulla (2005), falls into three categories; the intentions of the leaders themselves and their personal ethics, the way or manner in which the leader leads and the outcomes of the leader’s actions. In practice, ethical leaderships often falls onto their personal beliefs and how they achieve their eventual outcome and while there is no clear distinction behind ethics and effectiveness, Ciulla (2012) suggests that leading in an ethical manner can be effective and lead to success. This appears to be supported by a study by Chikeleze and Baehrend (2017) which identified that, when faced with making a decision addressing an ethical dilemma, leaders prefer a particular ethical leadership style and notes that knowledge of ethical leadership styles is beneficial for leaders to understand the process they utilize when faced with difficult choices. Brown et al (2005) define ethical leadership as having two components, the first is the demonstration of normatively appropriate conduct by the leader themselves while the second is the promotion of such conduct to their followers.

Ethical leaders, Jooste (2013) writes, distinguish themselves by doing what they believe is right even if it is inconvenient, unpopular and potentially unprofitable (temporarily, long term unprofitability would cause the business to be dissolved due to bankruptcy) in order to sustain the long-term sustainability of the organisation. Looking at the construct of an ethical leader Mihelic et al (2010) identifies that an ethical leader thinks about the long-term consequences of their actions, including the potential drawbacks and benefits of their decisions for the organisation.

Leaders serves as role models for their followers, and how they act are often how their followers believe that they should act (Mihelic et al, 2010). As noted by Hartog and Belschak (2012) and supported by Kalshoven et al (2011), Piccolo et al (2010), Mihelic et al (2010) and Trevino et al (2003) the behaviour of ethical leaders towards their followers include acting fairly, promoting and rewarding ethical conduct, and allowing their followers to provide input, as well as showing concern when unforeseen issues arise, while at the same time demonstrating consistency and integrity in their behaviour. In addition to allowing for the follower to take of responsibility of their own actions rather than assign blame. Further as Brown et al (2005) found, ethical leaderships predicts outcomes such the perceived effectives of leadership by followers, follower’s job satisfaction and dedication to their job and their willingness to report problems to management.

How leaders treats their employees plays a role in the employee’s personal development, as Semiromi et al (2013) found in a study looking at managers within the province of Charmahal-Bakhtiari in western Iran that treating employees with respect and socialisation with them led to employees being more interested in the organisation and their personal development while being just and honest had a weak correlation.

Overall ethical leadership implicates the concept and beliefs of followers and helps to make the work of followers more meaningful and motivated. This can provide a discordant with the behaviour of the leaders for the actual business of the organisation itself. A leader can be ethical towards their followers while working for an organisation or industry that it considered ‘bad’ or even ‘evil’ by society (Thoroughgood et al 2012).

Bad, Toxic and Destructive Leadership

At its simplest, bad leadership can be considered, alongside the concepts of toxic leadership and destructive leadership the opposite to ethical leadership.

Bad leaders tend to exhibit a number of characteristics such as; incompetence, either through personality/attitude or lack of skills/training/experience; the inability to be open to new ideas or ways of doing things; lack of self-control: callousness behaviour towards others, including ignoring or discounting the needs, wants and wishes or subordinates; being corrupt such as taking bribes, lying, stealing and using underhanded behaviour, putting their own self-interest before public interest; minimising or disregarding the health and welfare of those outside of their core group; and a tendency towards ‘evilness’, willing to commit atrocities as an instrument of power (Kellerman, 2005; Pinto, 2004; Shaw et al, 2011). A destructive leader can be perceived as such from only a handful of such characteristics, as low as one or two depending on how extreme others view them (Shaw et al 2011)

Toxic leaders tend to attract and ‘play’ with their followers and can abuse followers who have a psychological need for leadership (Romm, 2007). Interestingly in some cases followers tolerate, or even venerate toxic leaders and will aid and abet them in their endeavours, even if the end result will negatively affect them. (Grodnitzky, 2006). It can be argued that leaders are thus not the only ones to blame for bad leadership, as followers have responsibility for giving bad leaders the opportunity to lead (Kellerman, 2005), this is also considered destructive leadership. Studies of destructive leadership towards followers include a number of different forms, including abusive supervision, petty tyranny and pseudo-transformational leadership (Krasikova et al, 2013; Yenming, 2012). This is supported by the results of studies by Schyns and Schilling (2013) which have indicated that individual performance and morale is lower while there is a higher employee turnover and increased resistance towards bad leaders.

Unfortunately, destructive leadership is all too common and the task of dealing with them is difficult (Erickson et al, 2015). In order to prevent and manage bad leadership within an organisation Erickson et al, 2015 suggests that organisations must be selective in their practices of hiring and promotion opportunities with a clear framework model of the type of positive (ethical) leadership values and behaviours that are important for an organisation to flourish. While at the same time encouraging employees to feel free to voice issues in which they feel have contravened both their own but also the organisations values. This empowers the employees (followers) who are more likely to challenge toxic leadership, however once raised the onus is on the senior management team to support those who raised the issues and that the issues are dealt with.

Author: Jamie Hall

Author of Jamie A Hall.

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