Courage: The 7 areas where ethical leaders in business need to show courage

 

courageAll business leaders need to show courage in the role.

Courage at GSK
GSK CEO Emma Walmsley

If you’re an employee of pharma giant GSK, a new metric is about to enter your life. CEO Emma Walmsley wants to start judging your performance in the company on the new measure of “courage.” 

Courage matters for ordinary employees and for leaders. For a basic employee it could mean showing the courage to speak up when you see something going wrong.

For a leader or manager it might be pushing for change or resisting it. Being in the C suite seldom means an easy ride, but ethical leaders in particular need a strong dose of courage in their makeup.

This may include being willing to actively talk about and promote values–despite the cynicism of colleagues. Or resisting shareholders’ short-term expectations. Here are seven important business areas in which ethical leaders need to develop their brand of courage. 

culture1 Culture focus—courage to affect daily practice

Affecting corporate culture can be a hard road to travel. You’re almost sure to face powerful interests. These include people who resent the leader’s obsession with the importance of values. Such a focus may not win quick results. 

Jeff Immelt, CEO of General Electric headed up the corporation since 2001. His personal values as CEO became critical to the firm’s success. On a personal level he’s known to be honest, trustworthy and transparent. He establishes relationships with individuals all over the world. 

In contrast, the recent report on Uber by an independent legal firm, made many suggestions for changes. Especially about Uber’s culture. In particular it suggested a new COO (chief Operating officer) should have: 

“Experience in improving institutional culture.” 

 Decide what matters most about the company culture and see it appears regularly on all internal agendas.

 

compass

2 Moral compass—courage to do what’s right

A growing number of  CEO’s around the world have lost their jobs due to ethical lapses. These include bribery, fraud, insider trading, inflated resumés, sexual indiscretions, or discrimination.

To survive as a CEO today you must  find ways to convey to people you have a strong moral compass. What does that mean in practice? 

First it implies a leader with the courage to do what’s right, and to have the strength of character to speak up early about actual or potential ethical lapses. Second it suggests having zero tolerance for racism, sexism and lack of respect for others. 

Third an ethical leader must be strong enough to convert their moral compass into practical actions. This includes being willing to show by example what you mean by ethical behaviour. 

MuskFor example, Elon Musk of Tesla fame, wrote to all his employees about health and safety.  That could have been all that he did. Instead Musk promised to meet every person injured at work and to visit where the accident occurred, to learn more. Musk said he expected his managers to show the same commitment to the health and safety cause.

Fourth a strong moral compass means being aware of the dangers from ethical fading. This happens when decision makers fail to recognise that an issue or situation includes an ethical or moral dimension.  

See also: http://www.ethical-leadership.co.uk/ethical-fading/

A strong moral compass could even mean firing a high earning employee who is at odds with company values. 

When you spot something ethically dubious, act decisively 

 

No quick fix3 Short-termism—courage to resist the quick fix

World wide, business tends to suffer from an excess of short-term thinking. This may take the form of quick fixes that end up as long term liabilities. Or  it could involve efforts to maximise stakeholder returns but at the expense of making longer term investments, such as research.

When Amazon acquired Whole Foods Market in 2017, the latter’s CEO and founder commended Amazon for having the courage to: 

“Resist the drumbeat of short, quarterly earnings, that have had us trapped here for a couple of years.”

Yet it takes courage for a leader to say for example: “We’re not going to deliver 10% earnings per share growth. It’s going to be 5% while we invest in the future.”

Polman courage
Paul Polman CEO of Unilever

When taking up the top job, the CEO of Unilever Paul Polman announced something along these lines. He stopped issuing quarterly financial returns, declaring they were bad for the long term future of Unilever, encouraging short-termism.  He invited stakeholders who wanted immediate gains to invest their money elsewhere.  Polman’s commitment to creating a long term sustainable business marked him out as having leadership courage. This also took the form of a commitment to global concerns, such as poverty and climate change.

Keep asking about every decision: “what are the long term implications if we do that?

 

Relationships4 Relationships—courage to build connections

Yet another area demanding ethical leadership courage is when the leader sets out to excite and inspire people.

One of the most effective ways to lead is to connect with others.  Successful connection relies on trust and confidence. To build trust a leader must be willing to be vulnerable,  to share their personal insecurities or doubts about their own performance. See also: http://www.ethical-leadership.co.uk/vulnerable/

With trust comes people’s awareness of  the leader’s vision and direction.  Relationship courage gains buy-in from stakeholders. Ethical leaders therefore need the strength of character to listen to others. And to gain an understanding of their needs.

When you visit colleagues around the company, devote more time to listening than speaking

 

Meaning and purpose5 Meaning and purpose—courage to bring core values alive

“We want more from our leaders than an ability to make tactical decisions and preserve short-term or institutional goals…a failure to deliver the leadership that workforces and societies deserve has never been more visible.”
Laura Harrison Director of Strategy and Transformation, Purposeful Leadership CIPD 2017

As the recent CIPD study argues, there’s a serious gap between companies saying they want to do good, and their actual commitment to an ethical purpose. This shows up in the daily decisions of managers, employees and their customers.

What is the actual purpose your organisation?  How would you define its success? This question has gained considerable traction in recent years. Scandals, bribery and other bad practices challenge the purpose of any company. Many business leaders still see company success as mainly defined in terms of stakeholders–see chart below

corporate purpose

Ethical leaders need the courage to redefine corporate purpose. For example, rather than maximising stakeholder returns another approach is to find meaningful purpose in solving global challenges.  There are real benefits in helping a company to clarify its core purpose. see Note 1.

Ask people for real examples where espoused company values differ from what actually happens at work.  

 

Diversity6 Diversity—courage to welcome differences

There are proven, tangible benefits from a business harnessing workplace diversity. For example in a Forbes study of large global enterprises, with at least $500 million in annual revenue, 85% agreed or strongly agreed that diversity was crucial to fostering innovation in their workforce.

And a 2015 study found that women CEOs in the Fortune 1000 drove three times the returns as S&P 500 enterprises run predominantly by men.

Other diversity gains include achieving greater employee engagement and stronger forms of collaboration. 

Most business leaders grasp the importance of diversity. Understanding though, seldom makes a measurable difference to a business. To become a corporate asset, it’s necessary to work through the “how” of achieving diversity.  

Such an effort though does not appeal to all managers and leaders. For example, many cannot bear to suffer the practical inconvenience of managing diversity.  Fear also often prevents them from even starting such activity.  To become a diversity champion therefore demands a special form of leadership courage.  That is, a leader bent on moving diversity from good intentions to a practical reality means clarifying what non-inclusive behaviour and habits look like. Then doing something about this situation. 

Ask people: “How do we become a place where everyone can fit in?”

 

 

Risk7 Risk—courage to identify and handle risk

“…the competitive landscape is littered with the tombstones of firms that failed to understand and respond assertively to risk, the ethical and agile enterprises will inherit the spoils.”
D. Disparte, Simple Ethics Rules for Better Risk Management Harvard Business Review Nov 2016

The task of managing risk once seemed  a rather low level activity.  The focus was on controlling losses and keeping to compliance standards.

Today though, organizations fall prey to more complex and intangible risks. These include disclosure from cyber threats, breaches of conduct from skewed incentive systems, and unconscious bias.

Risk management now therefore goes far beyond just protecting the balance sheet. Instead it’s an intrinsic part of ethical leadership and values-based decision making. One of  the best way of, preventing problems from escalating into a crisis occurs when ethical  leaders have the courage to identify and tackle risk. They must learn to:

  • Juggle the need for rapid decisions while taking into account the associated risks
  • Ensure risk taking reflects company’s culture and core values
  • Seek out and listen to a wide variety of views that may reveal unexpected risks

In your next decision situation, experiment with involving a wider spread of opinion than in the past

 

Conclusion

Few ethical leaders excel in all seven of these areas of concern. At best, a leader will be brave in some of them. What matters is being a company leader willing to keep learning and growing, constantly testing themselves against the seven areas needing courage.

The first two decades of the 21st century have seen big changes in how society views business leaders.  Once they were seen as mainly there to increase production/productivity and profits. Now they’re increasingly regarded as responsible for ensuring standards of moral and ethical conduct.

So good leadership refers not just to competence. But also the ability to transform organizations and people’s lives. This requires forms of courage that previously never seemed part of the business role. The seven areas described here are ones in which all ethical business leaders need to develop courage to act:

courage

 

Note 1
A core purpose of Maynard Leigh Associates  is: “Helping companies bring humanity, meaning and vitality to the work place.” 

Sources:

Jeff Immelt: Mission & Values, http://tinyurl.com/y87omnet
Stock Market Wire, Unilever outlines review-driven actions, http://tinyurl.com/y9khoor66, April 2017 |
M. Geller and P. Barbaglia, Kraft Heinz bids $143 billion for Unilever in global brand grab, Reuters, Feb 18th 2017
J.Gapper, Kalanick lacks the ethics to steer Uber, FT 15th June 2017
Purposeful leadership: what is it, what causes it and does it matter? CIPD 2107
Covington Recommendations for Uber, 2017, http://tinyurl.com/yc2g744z A.Nicolaou et al, Amazon offer inspires a whole lotta love, Financial Times 21st June 2017
K.Rivera et al, CEOs are getting fired for ethical lapses more than they used to, Harvard Business Review, June 2017
E.Lytkina et al, What sets successful CEOs apart, HBR June 2017
K. Reardon, Courage as a Skill, Harvard Business Review, Jan 2007
P. Wechsler, Women-led companies perform three times better than the S&P 500, Fortune 2015
S.Neville, GSK chief takes courage in culture shake up, FT, 24th July 2017

You  may also like:
ethical fading “Ethical fading”: not just a convenient label, May 4, 2016

ethical fadingEthical fading: is it happening right under your nose? March 22 2016

 

 

 

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