Through the Manufacturing Lens: Traditional Management Versus Ethics-Focused Leadership

The relationship between management via the traditional scientific management methods and management via ethical leadership is meaningful in manufacturing as it is in other industries. Leadership in manufacturing has always put emphasis on cost savings, revenue building, and reducing the time it takes to make products or perform services. While these are excellent benchmarks, leaders are being urged to create opportunity, security, and build trust with employees while putting profits second (Panico, 2003). While policy and procedures can try to encourage this behavior in employees and leadership, the issue is not in the rules themselves. It is more about making sure that employees (and management) are playing by the rules (McClenahen, 2002). The purpose of this writing is to explore the effectiveness of traditional manufacturing management methods versus ethics-based leadership styles.

Following the ethical corporate scandals of the 1970s, 1980s, and 1990s, business ethics has become an issue of growing importance among those in leadership positions (McCann & Holt, 2012). In 2002, sixty-nine percent of Americans reported that they did not know who to trust in business anymore (McClenahen, 2002). It's doubtful that number has improved over the past twenty years. The importance of business ethics has led to a wide range of literature on the topic (McCann & Holt, 2012). Despite the number of scholarly works focused on business ethics, ethical leadership remains a challenging phenomenon, especially in the context of achieving company goals while honoring the individual will and avoiding manipulation.

Most attention on ethical leadership is focused on cognitive mechanisms in driving perceived accountability and organizational politics. While it is easy to blame individuals for ethical breaches and prescribe a new set of laws aimed at deterring leaders with questionable morals, the fact is all business leaders are subjected to ethical temptations of varying magnitude (McClenahen, 2002). The problem is not that people are more unethical than they once were, though more gray areas may exist in which to operate (Treviño & Brown, 2004). Blaming the perpetrator and creating new legislation after the fact do little to help those negatively affected by a leader's moral failure. A deeper look at existing leadership methods is needed to identify shortcomings and find an ethical path forward for all stakeholders. This paper will focus extensively on the manufacturing industry and attempt to determine how ethical leadership can provide an ethical culture that encourages ethical action in followers. 

Background

            There seems to be a revolving door of corporate scandals and ethics violations where the heroes that were applauded days prior are being scrutinized for unethical behavior (McClenahen, 2002). The manufacturing industry is highly dependent upon labor to operate a variety of crucial roles. Therefore, leaders must recognize how ethical and unethical actions can negatively affect employee and organizational performance (Mehta & Maheshwari, 2013).

Scientific Management in Manufacturing

            In manufacturing management, there is a notion left over from the rise of scientific management theory that employee satisfaction and corporate profits are incompatible (Lawler III & Hackman, 1971). Many of these traditional management structures can trace their origins to Frederick Winslow Taylor and his theory of scientific management (Taylor, 2011). Management systems operating under Taylor's theory operate under four principles. The first principle is that each job role should be studied scientifically, thus establishing a standard of work (Hodgetts & Greenwood, 1995). The second proposes selecting workers for specific jobs scientifically and then training them to perform the role to the best of their ability (Taylor, 2011). The third concept involves changing the mindset of company managers and workers to think in terms of mutual interests and maximum earnings for all parties (Hodgetts & Greenwood, 1995). Finally, the fourth principle of Taylor's Scientific Management philosophy suggests that managers handle the tasks for which they are best suited while workers handle the rest (Taylor, 2011).

         Though the popularity of his theory has a proven history, the principles have not been without critique (Wren & Bedeian, 2009). From the beginning, labor advocates were quick to voice their contempt for the theories of scientific management. These attacks on Taylor's ideas went as far as a congressional investigation in 1910 (Wren & Bedeian, 2009). Zuffo (2011) offered valid criticism of Taylor's principles by noting that this system removes the humanity and dignity from the employee. In addition, focusing on scientific methods and ignoring ethics can quickly turn an attempt to create resources and generate wealth into a means to maintain power and control over employees. McClenahen (2002) made clear the adverse effects of this management model.

“There is a residual distrust of business that has its origins in the management excesses of the Industrial Revolution, first in England in the late 18th century and then in the U.S. For example, stark images of greed, dishonesty and disingenuousness persist.” (McClenahen, 2002, p. 40)

Transactional Leadership

          Transactional leadership can be considered a contract between management and employees where the needs of both parties are met by each member meeting the contractual obligation. Burns (1978), who originally coined the term transactional leadership, asserted that the nature of this leadership style leads to short-term relationships of exchange between the leader and follower. As a result, these relationships are typically shallow, short-term exchanges that can lead to create resentments between the participants. Scholars such Yukl and Mahsud (2010) have criticized transactional leadership due to its universal approach that disregards situational and contextual factors.

A recent study by Frangieh and Rusu (2021) described transactional leadership as “carrot and stick” leadership. This simple analogy drives home the basic workings of transactional leadership. Looking through the lens of this metaphor, it is apparent why transactional leadership often went hand in hand with Taylorism and scientific management theory. As long as management maintains a carrot employees perceive as worth pursuing and keep a stick long enough to keep them from getting the whole reward, employees will continue to provide labor for management.

Honesty and Trust in Manufacturing Organizations

            In their 1996 study, Robinson explored the concept of psychological contracts where individuals form an expectation about the conditions and terms of an exchange between themselves and another party-often an employer. A prime example of this kind of psychological contract is an employee's expectation of ethical, trustworthy behavior by their leaders in exchange for their labor and loyalty. Robinson went further, stating that a psychological contract breach occurs when there is a real or perceived breach of trust by the leader. Research by Liang (2019) indicated that psychological contract breaches often contribute to dysfunctional behavior by employees in the workplace. A 2006 article by Hoobler and Brass reinforced this theory as their conclusion stated that employees are likely to feel frustrated with their employer when a breach of trust occurs. If the employee feels there is inadequate remediation to the violation, dysfunctional behavior often results.

A research study by Kouzes and Posner (2017) concluded that honesty was selected more often than any other characteristic as the most important factor in the leader-constituent relationship. In addition, the results indicated that people would not follow those they do not trust or those who will not or cannot give a clear set of values, ethics, and standards. Kouzes and Posner also found that organizational trust, or lack thereof, is a strong predictor of corporate success, team performance, and personal achievement.

Dignity in Manufacturing Organizations

Hodson (1996) found that management by excessive use of power led to a one-sided relationship that typically results in reduced employee dignity and little to no sense of pride in one's work. They noted that this type of environment is often noticed where there is direct supervision, assembly-line work, or bureaucracy.

A 1978 study by Clegg et al. examined females' perception and job satisfaction working in a shop floor manufacturing environment. Many interviewees expressed dissatisfaction with working on an assembly line regarding it as only a means of earning money. Overall, the results showed that women working on manufacturing assembly lines are significantly less satisfied with their jobs than those on non-assembly work. The perceived low complexity of such positions is a key contributor to participant dissatisfaction. In addition, some individuals perceived a significant mismatch between their abilities and the jobs they performed. As a result, some described spending parts of the time daydreaming to cope with boredom and monotony. In addition, the article found that working on assembly lines could contribute to deteriorated mental health. Subsequently, mental health scores were lowest for those who felt their skills under-utilized.

Leadership and the Negative Aspects of Reliance on Power

            Zuffo’s (2011) critique of management by science, in the absence of ethics, makes clear the danger of using power and control as a means to get results from employees. At best, executives use these management principles as a way to drive production by forcing employee compliance (McClenahen, 2002). In other cases, leaders exercise power to manipulate, instill fear, and make unrealistic promises to followers as a means to achieve business goals. All of these fit Veldsman's (2016) definition of toxic leadership, where those in power deliberately undermine another person's dignity and self-worth through physical, psychological, or spiritual abuse. Knuth (2004) used the term "cheap leadership" (p.?) to describe the leader that relies on reward power, coercive power, manipulation, or fabricating enemies as a means to an end. In short, toxic leaders abuse, bully, harass, and deceive those they are trusted to lead (Mehta & Maheshwari, 2013).

            Eicher et al. (2019) noted that follower manipulation is a clear signal of toxic leadership. One type of manipulation by a leader is making extravagant promises or predictions to followers, knowing the promises will not be kept and predictions will most likely never materialize (Lipman-Blumen, 2005). The leader's ill-fated promises and predictions make the follower dependent on the leader in hopes of staying in their good graces and seeing them arrive.

            Instilling fear in followers as a way to achieve the desired result is another form of misuse of power that falls under the definition of toxic leadership (Veldsman, 2016). In their study on the impact of ethical leadership in manufacturing, McCann and Holt (2012) found that fear causes employees to hold on to valuable information for fear of being bullied or as a means of retaliation against leaders for previous abuse. April et al. (2010) noted that fear is a major stumbling block for followers. The presence of fear may negate or detract value from other ethical behaviors.

            If the previously mentioned tactics fail to provide the desired result, the leader may result to use of force. Wrong (2017) described force as a "use of power where the recipient is treated as if he were no more than a physical object or at most a biological organism vulnerable to pain and the impairment of its life-processes" (p. 24). Use of force may take the form of physical or psychological abuse.

            Though the methods employed by a toxic leader determined to abuse power may vary, the results are much the same. While the tactics of these demagogic leaders may fulfill their own selfish needs, they are detrimental to employees, the work environment, and organizational success (Eicher et al., 2019; Paltu & Brouwers, 2020)

Ethical Leadership in Manufacturing

Ethical Decision Making

The manufacturing industry is no exception to the focus of business ethics. Following the ethical corporate scandals of the 1970s, 1980s, and 1990s, ethics has emerged as an issue of growing importance for those in leadership positions (McCann & Holt, 2012). McClenahen (2002) stated, "Executives of every manufacturing company--publicly traded or privately held, within the United States or beyond its borders--need to pay attention to these proposals because they are serious attempts to get at real leadership problems" (p. 40).

Given the importance of ethics in manufacturing, it is worth investigating the types of ethics and morals. Research by Damon (2005) identified four types of morality related to business ethics. First, generative morality is derived from deeply held internal beliefs and a sense of purpose. Generative morals provide commitment and grit during trials and hardships. Second, empathetic morality can be related to the golden rule where one considers the impact of their actions on others. Empathetic morals are what many people use to evaluate if their behavior meets society's norms for honesty and fairness. Third, philanthropic morals are charitable actions driven by a sense of goodwill and purpose. Examples of philanthropically moral actions include charitable donations or public service work. Finally, restrictive morals are societal boundaries put in place to restrict unethical behavior. Types of restrictive morals include damage to one's reputation, loss of employment, legal action, or imprisonment. Damon made it a point to identify restrictive morals as the ethics most often taught in business school. It was also listed by four out of five executives as the main factor that has kept their behavior within ethical lines.  

Given the complexity and contextual nature of ethical behavior, Harshman and Harshman (2008) offered a framework to make sense of the components of ethical decision-making. This framework, based on the work of Nadaff (1997), examines leader behavior and effectiveness through four filters; organizational context, the role of the leader, the situation, and the individual.

In addition to the four-factor model, Harshman and Harshman provided the ethical behavior model based on the prior work of Merlevede (2005), to analyze how a leader processes a decision from an event, through action, to results. The ethical behavior model is useful in understanding leader behavior within the context of culture. Though neither of these frameworks are perfect, they do provide insight into leader ethics, behaviors, and decision-making.

Ethics in Manufacturing

Bass (1985) claimed that leader morality contributes to the overall organization's success and pointed directly to integrity as an essential characteristic for successful leaders. A study by McCann and Holt (2012) used the Perceived Leader Integrity Scale (PLIS) to evaluate how 7,233 manufacturing employees in the United States viewed the integrity of their leadership. An overarching theme that resulted is that ethical leadership is critical in the eyes of manufacturing employees. McCann and Holt acknowledged that leaders in manufacturing face increased pressure to shift their focus to social responsibility as well as profits. However, it is imperative these leaders not lose focus on their ethics or integrity, for, if they do, they will likely be unable to achieve the lofty strategic goals of the organization.

Panico (2003) stated that business leaders in manufacturing have a responsibility to set an ethical example, and these ethics must be reinforced at every organizational level until it becomes a way of life. They also noted that ethical considerations should carry more weight for leaders than their decisions' short and long-term consequences. Leaders that fail to consider the ethical implications of their behavior and decisions will eventually be forced to answer for their unethical behavior or decision-making when the behavior is uncovered or becomes intolerable (McClenahen, 2002).

Positive Effects of Ethical Leadership

            McCann and Holt (2012) found that leaders set the standard for organizational behavior in the workplace. Leaders serve as role models for ethical conduct to employees, and this example, positive or negative, is highly visible to employees (Trevino et al., 2000). Toxic, non-ethical leadership relies on power to motivate and create an environment of fear and distrust (Eicher et al., 2019). In contrast, ethical leaders understand that power is derived from trust, and fear is a detriment to the organization (McCann & Holt, 2012). These leaders focus on building relationships and strive to encourage confidence from their followers. Employees in organizations led by an executive ethical leader will imitate their leader's behavior and will act more ethically themselves (Trevino et al., 2000). Thus, "leaders with firm beliefs and strong ethical and moral convictions will always have a positive impact on any organization" (Panico, 2003, p. 53).

            Ethical leadership creates a social construct by which individual member habits are formed, reinforced, and transferred throughout an organization (Helmhout et al., 2003). The dissemination of this social construct contributes to forming a cohesive culture of cooperation. In addition, the social construct helps form boundaries for individual behavior based on the foundational ethics demonstrated by the leader (April et al., 2010). In this way, the ethical example displayed by the leader serves as guidance for employees when faced with ethical challenges (McCann & Holt, 2012).

The Impact of Transformational Leadership as a Means of Ethical Leadership

Transformational Leadership Definition and Attributes

            Transformational leadership stresses the importance of followers in the leadership process by moving beyond traditional transactional models to broaden leadership's focus to include a focus on follower development (Northouse, 2019). Burns (1978) stated that transformational leadership is, in itself, ethical in nature as it considers the true needs of followers. Bass and Avolio (1996) concluded that transformational leadership consists of five interrelated components: attributed idealized influence, behavioral idealized influence, inspirational motivation, individualized consideration, and intellectual stimulation.

As a means for ethical leadership in manufacturing, transformational leadership has proven effective because it actively engages followers' value systems (McCann and Sparks, 2019). This consideration moves beyond the traditional transactional leadership seen in many manufacturing organizations and has been shown to improve organizational results. Panico (2003) found that leaders that routinely exhibit the transformative attributes of authenticity, honesty, and trustworthiness often reap the benefits of solid business relationships, friendships, and mutual respect. This relationship that exists beyond transactional leadership enables benefits for the organization, leader, follower, and society as a whole. McCann and Holt (2012) went as far as to say, "the level of transformational leadership and perceived leadership in manufacturing organizations may improve performance and strategic performance of organizations in today's global economy" (p. 643).  

Transformational Leadership and Locus of Control

            One aspect of transformational leadership that offers great promise in the manufacturing industry is the development of follower internal locus of control (LOC). Persons with external LOC believe their actions and destiny are controlled by chance or outside force. In contrast, people with internal LOC believe they are directly controlling their actions and destiny (Muh, 2018). Research has shown that employees with internal LOC have higher levels of job satisfaction and tend to make more ethical decisions than those with external LOC. Transformational leadership has proven to attribute to higher internal LOC and has positively predicted overall business performance (Howell & Avolio, 1993).

Transformational Leadership, Job Satisfaction, and Organizational Culture

            In the modern job market, attracting and retaining employees is a priority for all industries, including manufacturing. Trevino et al. (2000) noted that ethical leadership styles, such as transformational leadership, assist in attracting and retaining the best employees. In addition, transformational leadership has proven an effective method for driving employee job satisfaction and an overall positive culture (Paltu & Brouwers, 2020).  

            Job satisfaction can be defined as a positive or pleasant emotional state resulting from the appraisal of one's job and job experiences (Ilies & Judge, 2004). Research by Pardhi (2018) studied the factors affecting employee job satisfaction in the industrial sector. Pardhi’s research found that job satisfaction directly impacts organizational performance. The study pointed to intercompany relationships, leader behavior (including ethics such as trustworthiness), working conditions, and effective communication as essential factors contributing to job satisfaction, in addition, to pay and benefits. Pardhi noted that it is critical for industries to achieve the maximum output by ensuring job satisfaction among employees. They concluded that a sense of achievement, advancement opportunities, autonomy, opportunities for growth, recognition for achievements, and the nature of the work required are all critical factors affecting employee motivation, satisfaction, and productivity. Metwally et al. (2019) stated that leaders’ ethical behavior and overall trustworthiness have a substantial effect on building trust within organizations, boosting employee job satisfaction, and better task performance. These factors align well with the components of transformational leadership, suggesting that transformational leadership contributes to employee job satisfaction and better organizational performance.

 Transformational Leadership and Inspiration

            Sustained success in the manufacturing industry is highly reliant on building an environment that fosters highly effective, cross-functional teams and a culture aligned with accomplishing the common corporate goal (Haggerty, 2019). Pardhi's (2018) comment summed up well the importance of leader inspiration on manufacturing business success:

“It is evident that motivation is inbuilt within oneself, and all that is needed is for individuals to realize this and to address it. Nobody can motivate another but one can inspire another person to make the changes that are necessary to become motivated. Motivation has been seen to have a great influence on the productivity of the organization and hence this should be taken with the seriousness it deserves.” (Pardhi, 2018, p. 39)

The inspirational component of transformational leadership removes traditional barriers to teamwork and encourages a culture where employees' input is valued. Research by Alahmad (2016) found that transformational leadership, specifically in the manufacturing industry, results in positive employee outcomes such as intellectual stimulation, creativity, a sense of individuality, and inspirational motivation. Transformational leaders, by example, nurture organizational trust and group cohesiveness, thereby lowering incidences of incivility and increasing harmony within teams (Bureau et al., 2021).

Transformational Leadership and Innovation

            Globalization has placed greater pressure on manufacturers to innovate better products and more efficient processes as a means to compete and remain profitable (McCann & Sparks, 2019). In this fast-paced environment, business leaders are continually searching for new ways to elevate their businesses and processes to the next level to gain market share. To accomplish this, manufacturers need innovative employees who are not afraid to challenge the norms and create new products and processes that move the company forward. This behavior was described by McCann and Sparks as innovative work behavior (IWB), where individuals introduce and apply new ideas, processes, products, or procedures that can benefit the individual, the group, the organization, or the community.

Leaders who can drive a culture of innovation that moves past traditional barriers will have an easier time fostering an environment of continuous improvement and allowing employees to understand how their work contributes to the bigger picture of the company mission (Haggerty, 2019). McCann and Sparks (2019) concluded that in manufacturing environments, transformational leadership traits are highly effective in promoting innovative work behaviors such as idea generation, idea championing, and idea implementation than the more traditional transactional leadership styles. 

Ethical Leadership Limits Negative Impacts on the Family and Society

"In its absence (ethical leadership and decision making), there is no truth… no trust… no loyalty" (Panico, 2003, p. 52). Research has shown that negative events in the workplace may have a negative impact on employee family life (Ashforth, 1997). These negative events include unethical leader behavior that touches employees. This is alarming considering that Veldsman (2016) reported that three out of ten leaders within organizations exhibit traits of toxic leadership  

Research by Hoobler & Brass (2006) found strong evidence that employees involved in negative workplaces experience higher psychological distress, more dissatisfaction with their lives, and are more determined to leave their employer compared to their coworkers not subjected to negative environments. The findings of Liang (2019) concur with this theory as their study showed that the ethical failings of leaders result in strained employee relationships and frustration. If the breach of trust is not remedied, negative emotions often cross over into family interactions. Liang also found that a reversing cross-over effect results in a negative feedback loop if the employee continues to inflict negative emotions from work on their family. In this case, negative emotions from strained relations at home affect the employee at work, and the cycle repeats.   

Conclusion

            It is clear that leaders can have profound effects on their subordinates in positive and negative ways. After all, even the smallest acts of corruption can grow as ambition can turn to criminality without a second glance (McClenahen, 2002); however, gone are the days in which manufacturing management is solely focused on inputs and outputs. The production worker is begging to be seen by his or her leadership team. A leader can set an ethical example for his or her subordinates by using his or her beliefs and values as a natural basis for varying situations (Panico, 2003). No set of rules or code of conduct can carry the burden of morality alone. The rules are important but making sure that everyone follows the rules is vastly more important (McClenahen, 2002).

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