This is the fifth pillar of ethical leadership in business
Means not just ends
The fifth pillar requires a focus on means and not just ends. This is when a leader shows concern with how their organisation achieves its goals, not just the goals themselves.
Siemens built all the nuclear plants in Germany – a country that used a lot of nuclear power. In 2011 the company withdrew from the nuclear energy business. [i] But Siemens didn’t quit because of market conditions. It did not say
We’re pulling out because the German government’s move away from nuclear means there won’t be money in it”.
Instead the company said it was ending its work in nuclear power because of society’s clear shift.
It chose to avoid any future involvement whatsoever in a technology whose only purpose was to be used in nuclear energy. Its decision reflected an ethical choice–avoiding the taint of a “bad product” – rather than a simple market calculation.
This Fifth Pillar encourages leaders to take a macro view, to look beyond the financial bottom line at the social, environmental, economic and ethical implications of what the company does.
For example, making a profit can be ethical, but this may still be wrong if how it’s achieved depends on being unethical, for example cheating customers, destroying the environment, harming employees.
One of the most commonly reasons for misconduct continues to be pressure to do “whatever of takes” to meet business goals. Another factor is having in place systems that rewarded results over means.
This fifth Pillar requires leaders to make decisions without regard to their personal interests. Instead, the focus shifts to the “right decision” for the client or customer–what’s right for investors, what’s right for the firm, what’s right for the community, and even the world.
If the only way to solve a company deficit is through dishonesty neither you nor the company will be sustainable. Quite simply an ethical end does not justify the means.
The ethical leader in action
The fifth Pillar says “how we get there” is just as critical as “where do we want to go”–the actual destination. The implication is the need to build relationships to release the energy and creativity of people inside and outside the organization.
…there’s a realisation that companies have to compete less on what they do or make and more how they do it–which means a corresponding shift of emphasis from transactions to relationships.”
Ethics and Compliance Leadership Survey Report 2013,LRN
For example, in 2004 Kimberley-Clerk faced a fierce global campaign against its supply chain practices,
particularly around deforestation.
Rather than acting defensively, the corporation opened a face-to-face dialogue with their adversary. It even explored ways they could work together. This led to the joint creation of fibre‑sourcing standards, issued in 2009. These have since influenced sourcing practices in the wider market.
Ways to take the lead on means and not just ends include using corporate governance; stakeholder engagement; distinguishing leadership from management; and managing risk and reputation.
Action in all these areas can help promote a responsible organisation. In every case though, leaders must decide what is right. That is, they must take an ethical stance– to use their moral compass to set the organisation moving in the right direction.
Take for instance the area of corporate governance. This is how the company keeps all its policies and processes ethically sound. Experience shows though, it’s not enough to rely on regulations, codes and monitoring behaviour.
Instead, governance must be treated as a cultural issue, an area in which “how we do things round here” has far more influence than yet more efforts and investments trying to exert managerial control.
Similarly, stakeholder engagement is another way leaders can hone their ethical credentials. Stakeholder groups want consistency and transparency, so ethical business leaders make sure this happens. There are some useful“norms” beginning to emerge in this area to which leaders can refer if necessary.
These may take the form of an annual report for stockholders, an open-door policy for employees or a social media account where customers can leave feedback. Essentially, the ethical leader makes sure everyone commits to to the stakeholder engagement process, from the front-line customer service manager through to the business owner and CEO.[spacer height=”20px”]
1) Regularly review how goals are achieved in terms of acceptable norms, not just the goals themselves
2) Look beyond the financial bottom line to assess the social, environmental, economic and ethical implications of what the company does.
3) Avoid over reliance on formal governance measures to stay ethical, check the effectiveness of the culture–“how we do things round here”.
4) Involve all stakeholders in staying ethical, seeking their full engagement in being a responsible company
5) Seek to bring consistency and transparency to the company’s decision making process.
[i] http://www.bbc.co.uk/news/business-14963575 [spacer height=”20px”]
Five Pillars, countless ethical positions
What is judged as ethical, and what an ethical choice would look like, is subjective and varies among individuals and among and within cultures and organisations”
Institute of Business Ethics, Occasional Paper No 8 2013
Taken together, the five pillars help think through and clarify the approach to ethical leadership in business. In combination they require companies to go “beyond compliance”, which is still the main focus of most of today’s leaders, and focus attention on organisational culture.
Often those running organisations do not know how to lead ethically. They struggle to articulate their commitment to ethical standards, behaviour and practices. The five pillars provide a useful structure to support this struggle.
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