Influence: The Fourth Pillar of ethical leadership in business

This is the fourth in the series on the five pillars of ethical leadership in business

Five Pillars

Influence

Influence

The fourth pillar is about Influence. Basically this prompts leaders to ask about any particular ethical concern:

How can we influence through our ethical actions?” influence2

In answering this, leaders seek to create influence within the organisation and perhaps the wider community. The growth of CSR partly reflects this urge to use influence for mutual gain.

When it comes to influencing, business leaders face many choices, including support for numerous good causes.  Each will have its own emotional trigger or special appeal. Whatever the final choice it will be at the expense of many alternatives.

The many options for exercising influence can leave business leaders puzzled and sometimes overwhelmed. For instance, what criteria should they use in making the choices?

bodyshopBody Shop famously campaigns against animal testing of cosmetics. It selected an ethical concern which it could both influence and use to build its brand. Similarly, Goldman Sachs Group Inc plans to launch a $600 million fund goldman Sachs2to help women entrepreneurs in developing countries. It’s an effort to aid thousands of business owners and, of course, affect the bank’s somewhat tarnished image.

In asking “How can we make a difference through an ethical concern?” leaders may not always be self-serving. Instead, they may be directing the company’s efforts in an entirely logical direction. For instance, when IBM decided to use its computer skills to develop a system to help in disaster situations it was focusing its influence where it was most likely to make a difference.

ValuesThe Starting Point is Values

For leaders who want to maximise their moral or ethical influence the best starting point is values. These drive behaviour and spending time clarifying and promoting them can help in many ways, including rationalising what to influence.

However, those with a worldly perspective sometimes try to avoid ethical issues altogether in running their business. Desmond3They may argue there is no singular truth on which to base ethical or moral behaviour.

Well, ethical, I don’t quite know what the word means”

is the notorious response by Richard Desmond to a question from the Leveson Committee of Enquiry into the British press.[2]

Yet certain values do have a universal appeal and business leaders cannot avoid taking them into account. For example [3]

  • Courage and integrity—the ability to “do what’s right” even when no one is looking
  • Love and Kindness—these show up as an organization “with heart”, where compassion, kindness and mutual respect guide people in facing ethical challenges.
  • Justice and Fairness—these exist for example when individuals feel they receive a fair return for the energy and effort they expend.
  • Means matter as much as ends—see fifth Pillar.
  • Self-Control– Putting personal motivations aside and acting with objectivity by doing what is right.

These are generally better guides for how to run a successful organisation than a single-minded obsession with profits, or a myopic concern with meeting all legal standards.

A one-track concern with financial returns puts the emphasis on accountability, rather than being a responsible member of either an organisation or wider society– which is what ethics is all about; and because some course of action is technically legal does not necessarily make it “right.”

Influence of shareholders

Some business leaders use the supposed demands of shareholders as an excuse for avoiding involvement in ethical matters. They argue ethics is too messy to be of use, and  shareholders are only concerned with making the most from their investment.

maxmise profitFamously, the economist Milton Friedman argued corporations only had a duty to maximise their profits.

In fact, since the 1960s a significant and still growing percentage of shareholders now has non-financial expectations about corporate conduct. This appears first as shareholder activism and secondly as socially responsible investing.

Ethical business leaders must now therefore take into account the social concerns of stakeholders. For example in the US, both Dow Chemical—over its sale of Napalm, and shareholdersGM—over board representation, strongly resisted the idea shareholders could influence fundamental aspects of their business.

Both companies lost the argument in court, and more importantly have lost it within society as a whole.[4]

Reflecting this we have seen a growing willingness by investors to challenge companies over many social concerns and particularly about remuneration policies.

There is increasing consensus of what society expects from corporate conduct. This affects both what business leaders must do about ethical issues and how they go about using their own levers of influence.

leversLevers of influence 

There are now well documented and practical ways to steer a company down a path of ethical business behaviour.  Apart from formal regulations directing companies to behave in specific ways, there are countless guides, case studies and tools available to convert ethical influence into practical action. These include:

take action

  • Identify core values and make sure they suffuse the organisation’s direction and strategy.
  • Establish a formal statement of organizational values and provide a framework of expected behaviour.

    “..values must lead and be right up there in a company’s mission statement, strategy and operating plan.
    Ben & Jerry’s Ice Cream founders Ben Cohen and Jerry Greenfield

  • Review standard operating procedures and performance measurements—make sure these do not encourage unethical behaviour.
  • Lead by example—don’t just talk about values and ethics, personally demonstrate them
  • Use existing capabilities to benefit the wider community in which the company operates  

[1] O.C Ferell, et al, Business ethics, 7th edition, South Western Cengage Learning, 2010

[4] K. Glac, The Influence of Shareholders on Corporate Social Responsibility,2010

Five Pillars

 

Previously:

Introducing the Five Pillars

First Pillar: Commitment

Second Pillar: Relevance

Third Pillar: Add Positive Value

 

 

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

 

Home page of Maynard Leigh

Why not subscribe to Ethical-Leadership.co.uk and receive our regular briefings–see the subscribe field on the right panel.

 

 

Comments are closed.