THE ETHICS OF LEADERSHIP
A number of prominent leaders of organisations locally and globally have been challenged on their ethics, the culture they have created and the detrimental (and preventable) impact on customers. Naturally, this is creating a lot of discussion around what the expectations of CEOs and executives are in guiding the modern organisation, especially given how quickly and brightly the spotlight can be shone on ethical breaches – and how leaders respond or don’t respond to such events. Put simply, ethical behavior is knowing and doing what is right, regardless of personal consequence.
Executive leadership includes responsibility for the behaviors of others and the organisational mechanisms that influence those behaviors such as performance and remuneration frameworks. Organisational culture is shaped and impacted by leaders’ language, symbols, priorities, role modeling and behaviors. Ethical leaders take both a short and long-term view in guiding the organisation’s moral code – both in the good times and the challenging times.
The Centre for Ethical Leadership advises that the ethical leader’s toolkit must include the knowledge and skills for ethical reasoning, independence of thought, listening, flexibility and coping with failure and that this is a lifelong evolving journey.
However, the leadership journey is not without its challenges ranging from economic performance, competitor challenges, retention of top talent, data breaches, internal organisational failures, personal issues and a host of other unexpected surprises. The test for the ethical leader is how they inwardly and externally react to such challenges and lead the organisation through the period of uncertainty.
Whilst the CEO themselves may operate with integrity regardless of the impact on themselves from a reputational, remuneration and job security perspective; they may face challenges from their executive team who may operate with different personal priorities and strength of character. Leaders need to be courageous in the face of potentially overwhelming opposition and robust debate from their (hopefully) trusted advisors and executives.
Their ability to be steadfast will provide excellent role modeling for the rest of the organisation and clarify the ethical standards to be upheld. It opens the door for the organisation to discuss and debate responses to challenges openly.
It should be noted that there can be an unintended consequence and risk of a rigid leader creating organisational stress by creating unattainable standards; so leaders do need to set the right tone to ensure that employees feel empowered to create sensible shortcuts if they don’t lead to unethical outcomes. There is little merit in creating unnecessary bureaucracy and red tape that impedes organisational performance if the outcome isn’t impacted. Equally, leaders need to help their employees operate ethically by providing training, support, and guidance to help them do the right thing.
Ethical CEOs fully appreciate and accept they have full responsibility and accountability for the decisions and actions of their employees and that excuses or blame shifting are not the answer. They hold their direct and indirect reports to account and swiftly exit non-compliant leaders and employees, even if it impacts the organisation’s revenue generation in the short term. Ultimately, the CEO will be held accountable by their Board and the public (their customers) – and in some cases, the law.
Ethical leadership enables good business practices and greater respect for and trust by their customers. Breaching that trust (especially, if the organisational failure is not immediately owned up to publicly and covered up, rather than discovered by the press well after the fact) can immediately erode even decades’ long loyalty to a brand and consumers will vote with their spending power.
