The second pillar guides leaders to ensure ethical concerns connect to their business–directly or indirectly.
How does ethics affect my business”
This second pillar therefore encourages a leader to ask
Is this ethical choice relevant to our business?”
This is not always simple to answer. Take for example modern day slavery. This may appear to have little immediate relevance or connection with a company’s daily concerns. But how the company sources its raw materials and transforms them into final products and delivers them to customers can seriously damage both brand and reputation.
No responsible company wants to be seen supporting inhuman practices.
A coffee company for instance faces relevance issues when sourcing its raw beans. Are these picked from sustainable plants without deforestation? Does it pay a living wage to locals and avoid damaging their way of life? Positive answers in the buying strategy can connect with the business by becoming a selling point for the final product, as has happened with the Fair Trade brand.
Many issues apparently far removed from any direct relevance may actually have an important connection. For example, most outsiders would hardly expect the profit hungry Goldman Sachs bank to support women in poverty around the world. How could this be relevant to its money-making obsession?
Yet the bank’s philanthropic foundation funds over 10,000 poor female entrepreneurs. Such an investment occurs of course partly from a need to polish a tarnished image and to please employees–giving it a relevance of a kind.
Funding poor women entrepreneurs has unexpected benefits. The bank expects to tap governments and others companies to turn its $50 million donation into a fund of more than $600 million.
Similarly Cheyne Capital, one of London’s oldest hedge fund managers, seems a typical hard-core capitalist enterprise, bent only on money making. Yet a new fund has raised up to £300m to invest in projects with a positive social impact.
Behind this seemingly contradictory activity, lies a trend in which many investors show increasing interest in how their money can tackle social issues, as well as achieve a financial return.
Making sure your ethical focus has business relevance tends to be mainly a long term decision. “Doing what’s right” is not a cost benefit exercise, its a moral choice.
Expecting a short-term, measurable ROI from such actions would be myopic. It is more sensible to ask: “does this ethical choice have relevance to us in the long term and if so how?”
A creative and well managed corporate and social responsibility programme is in the best interests of all our stakeholders – not just our consumers – but also our shareowners, employees, customers, suppliers and other business partners who work together with us.
Extract from Cadbury Schweppes Good Governance report
Using the second ethical leadership in business pillar suggests various practical actions:
1) When facing business choices with an ethical or social implication ask: does this have relevance to our business now and the long term?
2) Check the ethical implications of the company’s goals and business plans–explore for hidden benefits and unexpected drawbacks.
3) Ensure all business decisions pass through an ethical “filter” to assess the wider impact on people and the planet
4) Seek ways to make a positive, not a negative impact on the operating environment and “do what’s right.”
5) Establish clear ethical guidelines to ensure all stakeholders understand and subscribe to them
The Third Pillar of Ethical Leadership in business on Positive Value, will be published next week.
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
Why not subscribe to Ethical-Leadership.co.uk and receive our regular briefings–see the subscribe field on the right panel.