This is the third of a series of posts on the five pillars of ethical leadership in business
Add Positive Value
Aghast at reading his obituary while still alive, Alfred Nobel saw his likely legacy to the world would be entirely negative. He redeemed himself by switching his wealth from armaments into launching the Nobel Peace prize.
The third pillar of Ethical Leadership in business prompts leaders to look for ways to add positive, rather than negative value to what their companies do.
The notorious Koch brothers for instance devote a considerable portion of their enormous income to funding political campaigns against every kind of environmental or other regulation. If “doing what’s right” threatens their huge profits they will seemingly oppose it. They disguise this with a smokescreen of philanthropic donations to prestige institutions like the Smithsonian. Critics brand their destructive network of think tanks, foundations, lobbyists and tame politicians “the Kochtopus”.
Similarly Exxon, the largest oil company in the world has been the loudest voice protesting against effective international action on climate change.
Much of the effort though has shifted to untraceable sources of money supporting an obstructive stance aimed at undermining efforts to gain agreement on positive action.[i]
Such activities do not add positive value. Instead they play an entirely negative, destructive role. They protect narrow, vested interests at the expense of the rest of humanity. In simple terms they are unethical.
Presented by some leaders as a business constraint, ethics can offer many unrecognised opportunities. There is now strong evidence for instance, that acting ethically is strongly linked to
1) Improved financial performance ; 2) Reduced operating costs ; 3) Enhanced brand image and reputation; 4) Increased sales and customer loyalty; 5) Raised productivity; 6) Reduced regulatory oversight; 7) Improved access to capital; These are positive benefits that only the most ethically tone deaf will choose to ignore.
While acknowledging the real value that ethical culture brings to the bottom line, even informed leaders still worry about how to get the job done. This third pillar of adding value encourages leaders to go beyond management as usual. Too many companies do the minimum to reach ethics and compliance standards. This leads to diminishing gains instead of increasing ones.
How can a leader use ethics to add positive value?
A practical step is to make sure ethics and compliance are integrated into operational decision making. That is ensures ethics permeates the culture and drives changes in behaviour. A further benefit from this is to reduce inconsistencies and the impact of silos.
Another positive leader action is seeking to alter the company mind-set. Instead of ethics and compliance being seen as a defence against misconduct, instead it is used to play a vital role in contributing to high performance.
For example, only around four out of ten companies integrate ethics and compliance objectives into their performance and compensation reviews.[ii] This provides yet more scope to ensure ethics add positive value to the company. Finally, leaders can ensure ethics add positive value by ensuring they help their company reach beyond education and communication, to affect a variety of company practices including:
Performance appraisals, promotion and recruiting practices, what is celebrated and rewarded and punished, customers’ services, and sales training.
In search of adding positive value through ethics here are some basic actions leaders can explore:
1) Can ethical issues and concerns be readily discussed in my company without negative consequences?
2) Does my senior management support and practice high standards of ethical conduct?
3) Is my organisation clearly committed to serving the interests of all its stakeholders including customers, employees, suppliers and community, not just shareholders?
4) Is the behaviour of our employees consistent with the organisation’s mission, vision and values?
5) When we advance or reward our employees is this based on behaviour that demonstrates our company values? [iii]
Next week the fourth Pillar of Ethical Leadership in Business: Influence.
Here’s how I and my company Maynard Leigh Associates can help you make sense of ethical leadership
- Help you clarify what business ethics mean for your particular organisation
- Coach you to understand what it means in practical ways to be an ethical leader
- Run internal programmes to identify and develop core values affecting company culture
- Assist leaders to establish and communicate leadership tone–inspiring people to act responsibly
- Develop managers’ and leaders’ confidence to talk about and promote business ethics
- Advise on generating employee ethical engagement–where people go beyond the basic rules of compliance
- Develop new, creative ways to encourage people to speak up about ethical issues
- Strengthen HR Team and their ethical role
- Run forum theatre sessions to communicate about ethics in a highly interactive way
- Write an article or feature for you on ethical leadership for your publication
- Be a keynote speaker about ethical leadership at your next company or public event
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