Ethics are not just for the birds

Anyone who believes ethical leadership and ethics in business are a distraction from the main agenda of making money is sadly mistaken.

Just about every part of the business sector seems riddled with enquiries, fines, regulatory cautions, severe loss of reputation, and even headline-inducing court cases.

UK executives and firms have been fined over £1bn for fraudulent practices in the past five years [1]

In such a climate being a leader is hardly a soft number. The banks are only one part of the story but certainly a telling one. If you run RBS for example, you are currently “looking for a fresh start”.

If you are leading Barclays doubtless you are probably wondering “when will this constant attrition of fines and regulatory enquiries end, so we can get back to running a respectable bank.”

If you are Piet Moerland until recently CEO of Rabobank, you’ve recently had to step down, leaving the bank with its £662m fine from the US, UK and Dutch regulators over the Libor interest rate-fixing scandal.

As for leading one of the big energy companies, what it means to run a responsible business is hardly a mere passing annoyance. Their combined leadership is now openly accused by one of their own minor competitors of being the “best filibusters in the business”.

The industry’s most senior executive has just publicly admitted it has lost the trust of society as whole. For leaders of the energy industry ethics are hardly just for the birds.

Or take the meat industry. How long will it take to recover its credibility of being a responsible industry while stories keep surfacing about contamination of its products? As a leader you naturally respond virtuously to the bad news: “As soon as we were made aware that the FSA had found traces of horsemeat DNA in the Food Hall Sliced Beef in Gravy it was removed from sale.” Why though, did you need someone else to get there first?

Probably the less said the better about the media, with its dismal failure to arrive at what most people see as a responsible basis for future performance. Meanwhile, in the UK, a high profile court case of international interest involving unethical and illegal practices trundles relentlessly down the rails. We can expect at least six months of ugly accusations and anguished defences.

Avon the cosmetics company admits a likely settlement over bribery in China will reduce sales and GSK faces similar problems in the same country. Leaders in both organisations may seldom mention the word ethics, but sure enough it’s now firmly on their agenda.

If you lead the National Security Agency in the US or the security services in the UK, big questions marks are now poised overhead as to your organisation’s ethics. You may rant and accuse Mr Snowdon in Moscow of traitorous behaviour. But across the globe many of your allies are questioning your leadership, motives, actions and indeed ethics.

So what can we conclude from this litany of unethical and often reprehensible leadership and corporate behaviour? One dubious interpretation is this is just one side of the capitalism coin—the price paid for the other side, namely vigorous creativity and entrepreneurial behaviour that builds wealth and nations.

Another view though is ethics are neither a distraction nor a minor blip on the horizon.

The obvious concern of communities around the world with what it means to run a responsible organisation cannot be ignored.

Rebuild your reputation says the head of the Britain’s leading employers group the CBI John Gridland. At his organisation’s annual conference he urged this audience to set about rebuilding its reputation, battered by the failures and apparent excesses of recent years. [2]

Leaders everywhere will pay a high price, both personally and organisationally unless they start talking about ethics and really mean business.

1 Ernst & Young research, Audit & Risk, April 2013

2 CBI boss: business must rebuild reputation, L. Elliot, Guardian 1 November 2013

 

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