The road to ethical leadership development

The journey of ethical leadership development is a lifelong pursuit and the final destination is always further down the road.  The last two posts discussed some of the characteristics of the ethical leader and the daily focus of the ethical business leader.  To discuss leadership implies a destination.  Where will we be a year from now as we continue to focus on our regular endeavours?  The ethical leader must establish and impart a long-term vision, take others along the journey and gauge whether goals are being achieved.

Ethical leaders establish a vision.   Ethical leaders must constantly remind the team of the company’s worthy vision or its raison d'être.  Employees will toil when they know their contribution is adding to the greater good.  The ethical leader serves as the champion for the vision, charged with keeping the lofty goals as “top of mind” with its stakeholders.  Any company or board of directors can create a vision statement strewn with the latest buzz words and catch phrases.  The ethical leader not only believes in the vision but acts in a manner consistent with fulfilling the vision.  Savitz and Weber conducted research with Ohio-based energy provider AEP.  The company’s vision was to provide a safe environment for workers through a “zero harm” policy.  Savitz and Weber outline Edgar Schein’s three components of organizational culture: Artefacts (“what we do”), Espoused Values (“what we say”) and Underlying Assumptions (“what we believe”).  If all three are not aligned, it is difficult to pursue organizational goals.  For example, if the company states that safety is important but does very little aside from posting the obligatory signage to promote safety, a conflicting message will demoralize and confuse employees.  Ethical leaders establish and maintain the vision, taking the necessary steps for success.

Ethical leaders take others on the journey.  Ethical leaders are not lone wolves.  They work in an ecosystem that depends on multiple layers of responsibility, employees with varying degrees of knowledge and expertise and numerous other obligations.  No leader can do everything.  This was probably one of the most difficult things for me to learn.  When entrepreneurs start a venture, they are typically doing all sorts of things as chief cook and bottle washer.  In order to scale the business, this immature attitude must change.  And there is no room for ego.  A common theme with entrepreneurs who grow businesses is entrusting certain aspects of the company to individuals who are much more capable.  Continue hiring folks who are smarter and better in certain areas, and focus on the business of ethically leading the business.  Hiring and retaining top talent is facilitated by the organization’s worthy vision.  People want to be part of something special, and as an ethical leader, it is important to groom others to fulfill the vision.

Ethical leaders gauge success.  Ethical leaders must keep the ship on course and constantly monitor whether goals are met.  The ethical leader is responsible for establishing the proper steps to fulfill the vision.  In our example concerning AEP and its “zero harm” policy, how this is to be accomplished must be clearly outlined.  A good rule for all leaders when establishing objectives that further an organization’s vision is to follow S.M.A.R.T.  (There seems to be some uncertainty as to who is responsible for coining the acronym.)  A “smart” objective is specific, measurable, attainable, realistic and timely.  For example, a person stating that they want to get healthier is not using the “smart” guideline.  On the other hand, a person claiming that they want to get healthier by losing 10 pounds in three months through a combination of diet and regular exercise is using the “smart” approach.  The only way ethical leaders can realistically pursue success is by creating tangible bit-sized morsels from the company’s long-term vision.  These objectives can be gauged by the ethical leader to monitor whether the ship is headed to the right destination.

Ethical leaders create a worthy vision, take others along for the ride and constantly monitor results.  Without the vision, leaders are not leaders at all because leaders are on a journey to a specific place.  One of the main duties of the ethical leader is to champion the vision and help others understand its significance.  Without vision, it is impossible to hire and retain the best talent since human beings have an innate desire to be part of something that contributes to the greater good.  Gauging success is a fool’s errand without vision: If your destination is nowhere in particular, you’ll certainly get there.      

Ethical leadership development in action

Last week’s post discussed the qualities of ethical leaders including integrity, compassion and skilful communication.  The current issue discusses the focus of the ethical leader.  In which specific areas should the ethical leader devote time and energy in a world of ever-growing demands?  There are many tasks an ethical leader can accomplish which may be good, but what should be pursued?  It goes without saying that the ethical leader’s time is valuable.  I was reminded recently by Adam Bryant’s post on LinkedIn that it is imperative to distinguish between action and activity.  The latter may offer a sense of accomplishment and enjoyment but does not necessarily lead to the desired destination.  The former is purposeful, goal-driven and pursues the long-term agenda.  Ethical leaders should focus their time equally on the following: self, company and employees.

Ethical leaders invest in personal development.  Ethical leaders are learners.  They love to learn new concepts benefiting themselves and others.  Tim Sanders describes this type of person as a love cat.  The most important transformation that occurs when one loves to learn is that they are open to change.  Even after 20 years on the job, it is possible to continue learning.  This should seem obvious because the business landscape changes over the years but there are still far too many people who think they know everything there is to know about their industry.  Ethical leaders passionate about knowledge often become great teachers who seek to help others.  Dee Hock, founder and CEO Emeritus at Visa states:

“Here is the very heart and soul of the matter. If you look to lead, invest at least 40% of your time managing yourself -- your ethics, character, principles, purpose, motivation, and conduct. Invest at least 30% managing those with authority over you, and 15% managing your peers. Use the remainder to induce those you ‘work for’ to understand and practice the theory. I use the terms ‘work for’ advisedly, for if you don't understand that you should be working for your mislabeled ‘subordinates,’ you haven't understood anything. Lead yourself, lead your superiors, lead your peers, and free your people to do the same.  All else is trivia.”

Ethical leaders invest in the company.  Ethical leaders find ways to benefit the company.  The result may be new growth opportunities, marketing plans or products, but the driving force is always leadership.  Ethical leaders must make time to lead.  Leadership is not management.  Both are important and the roles may intertwine; however, it is only leadership that blazes a new path and ventures into previously unknown territory.  Most global companies perform management functions exceptionally well, but fewer are led exceptionally well.  As global PC shipments fall, and sales of the new Surface tablet position the product on the brink of irrelevance, Microsoft’s future depends on leadership not management.  It is natural for a company that developed the most popular operating system in the world to continue focusing on business as usual.  Ethical leaders invest in organizations to produce the unusual.

Ethical leaders invest in employees.  The stakeholder concept includes employees, society, government, suppliers, competition and clients.  Business does not grow in a vacuum, and to varying degrees, depends on stakeholders for vitality and sustained growth.  Employees are arguably the most important stakeholder in any organization.  Countless businesses understand the cliché but do not demonstrate how employees are valuable.  The perfunctory holiday party does not cover a multitude of ills during the course of the year.  Ethical leaders invest in employees by rewarding a job well done (a very simple “thank you” note which any ethical leader can afford regardless of financial circumstances).  Ethical leaders understand that the company is like a second family and employees are more than the job titles on business cards.  It’s been shown time and again that financial earnings are not the most important part of the job.  Ethical leaders invest in employees by rewarding workers.  Gratitude is a form of reward and reaffirms that a job was performed well and sends a positive signal to engage in more of the same. 

Time is certainly a valuable and irreplaceable commodity.  It cannot be horded or manufactured, so it is vital that time spent by ethical leaders propels the business closer to the desired destination.  I spent years on activity – managing projects, teams, budgets, vendors – but not enough time on goal-oriented action items.  Keeping busy felt good and I enjoyed various aspects of the work, but my time was not being used effectively.  I learned that establishing a vision, empowering a capable team, delegating tasks and practicing ethical leadership are vital to the long-term success of any company.  Ethical leaders invest in self, company and employees by deliberately focusing on ways to improve each area on a daily basis.

Elements of ethical leadership development

Ethical leadership is crucial for the realization of socially responsible goals benefiting society.  Good business leaders are concerned about more than profit.  They are equally concerned about the impact of the business on stakeholders and the environment.  What are the key components of ethical leadership development?  Integrity, compassion and communication are important characteristics of ethical leaders.

Ethical leadership includes integrity.  Integrity is derived from the Latin and means whole or complete.  An individual with integrity does the right thing because it’s the right thing to do – not because the boss or clients are watching.  A culture of intergrity is a game-changer for any organization.  After the initial training and the corporate value statements are distant memories, employees do what they see.  If the manager decides to bend the rules, the rest of the team is likely to follow.  In the wake of the 9/11 tragedy, with the airline industry reeling, few would have blamed Southwest Airlines if they decided to abandon their no lay-offs policy.  The company stuck together during the tough stretch.  As CEO James Parker stated, "We are willing to suffer some damage, even to our stock price, to protect the jobs of our people."

Ethical leadership includes compassion.  Employees and even soldiers are willing to follow a leader who cares for them into the great unknown.  I’ve heard several times lately – and this rings true – that people don’t care about what you know until they know you care.  Employees are people first.  Although we've all heard the clichés about treating customers/students/employees (fill in the blank) like humans and not numbers, it takes diligence and effort to execute.  It is easy for any leader to consider those in their charge as commodities, but the discerning ones understand the power of compassion.  Roman historian Curtius described a sliver of time with Alexander the Great thusly, “Riding to the front line he named the soldiers and they responded from spot to spot where they were lined up.  The Macedonians who had won so many battles in Europe and set off to invade Asia…got encouragement from him – he reminded them of their permanent values.”

Ethical leadership includes communication.  It’s impossible to be an ethical leader without mastering the art of effective communication.  Skilful speech is just one aspect of communication; arguably, the more important part is listening which helps develop insight and understanding.  Leaders are in contact with various stakeholders on a regular basis: Communication is vital to the role.  James Humes states, “Every time you have to speak, you are auditioning for leadership.”  A leader’s speech establishes the vision which is used to motivate and inspire the team.  When energy levels wane, a leader’s words encourage and help keep things on the right path. 

Ethical leaders exude integrity, compassion and effective communication.  I've certainly learned a great deal about leading through my professional life as entrepreneur and educator.  A promising business idea may bring success if executed properly, but it speaks nothing of the moral fibre of corporate leadership.  Ethical leadership development is a journey, not a destination.  As with every journey, steps must be taken everyday to ensure progress.    

Creating competitive advantage through the ethical treatment of employees

The well-known adage states a business should take care of its employees first and foremost.  If it does, the employees will treat customers well.  There is certainly some good sense to it, but we need to dig deeper for some meaningful understanding and application.  The treatment of employees is one of the biggest ethical concerns facing any business.  Small businesses are especially vulnerable as resources may be lacking in training, human resources and formal grievance procedures.  Satisfied employees are beneficial in a number of ways and add value to business.

1.       Empowerment produces competitive advantage.  One of the first questions asked at a typical gathering involving new introductions is “What do you do?”  Especially prevalent in Western society, one’s work has a tendency to overshadow one’s value as a person.  Transcending culture is the need to be accepted, valued and appreciated.  Workers are more than job titles.  When employers understand and implement this important principle, employees respond positively.  The motto at the Ritz-Carlton is “We are Ladies and Gentlemen serving Ladies and Gentlemen.”  The service at the upscale hotel chain is legendary and it begins with treating workers the right way.

2.       Engagement produces competitive advantage.  An intriguing study by Savitz and Weber discusses sustainability at a quick-service chain.  Research suggests that customers of the chain did not really care about sustainability issues like water conservation, eco-packaging and reducing waste.  Instead of filing the report and carrying on as usual, the management focused on the key stakeholder group that cared about sustainability – employees.  The results at this particular chain are compelling: customer satisfaction increased as employee engagement levels rose, employee turnover decreased as employee engagement increased and the company saved significantly by implementing some basic principles of conservation.

3.       Excellence produces competitive advantage.  Employees motivated by excellence share a number of common traits including integrity, compassion and diligence.  The job isn’t just a set of rules and functions but a way to make a difference – whether undertaking the role of janitor or president.   Tim Sanders discusses how sharing kind words, knowledge and business contacts builds success in Love is the Killer App: How to Win Business and Influence Friends.   Going above and beyond creates bonds and differentiates from the competition.  When my wife and I stayed at a W Hotel in Chicago several years ago, this excellence was on display.  After Jacquie offered some painting tips to a member of the housekeeping team, we discovered a bottle of champagne in our room later that same day as a gesture of gratitude.  We were, of course, thrilled and although I don’t normally gush over brands (even the ones I appreciate on a daily basis), this experience I won’t soon forget. 

Businesses face ethical quandaries everyday.  The potential challenges are opportunities to add value and build brand equity.  Whether heading a company with an employee count of two or two thousand, competitive advantage is found in treating employees fairly and humanely.  Added value comes from empowering, engaging and encouraging employees to excel in their roles.

Leadership, effective communication foster ethical outcomes

Some lessons are gained over the long haul – others are hard and fast.  This one is in the latter category.  What seems like a lifetime ago, when my professional time was expended as co-owner of a marketing research company, we were targeted by scammers.  Our company name and logo was used without our knowledge or consent to dupe unsuspecting consumers in North America.  The phone calls started pouring in.  Most heeded our pleas to contact their local police department and avoid these criminals altogether.  Others were frantic.  I learned a lesson in human nature as I was trying to convince a woman from Chicago not to deposit a forged cheque and wire money to a third party.  The woman, like many, was clinging to some hope that the deception could be true.  Although we didn't talk in great length, it was apparent she desperately needed the cash.  Unfortunately, these scams continue and often target the most vulnerable in society – elderly, young, ill, financially strapped people who are searching for a life line.  The story captures the reason behind my commitment to business ethics.

How does one pursue a right or ethical course of action?  I believe it is not enough to know what’s right – most folks know what they should do but often take the opposite road.  Just talk to the average smoker: they understand that cigarettes cause negative medical issues but continue regardless.  Doing the right thing is often hard, especially when it is unpopular.  For this reason, ethical outcomes require ethical leadership.  This type of leadership isn’t just concerned about profit or personal gain but carefully considers stakeholders such as employees, suppliers, shareholders, government, competition and the community.  Massive flooding forced Idomo owner Gerrit De Boer to close his Toronto store for months in 2002.  He continued paying employees during this challenging stretch even though the furniture retailer wasn't open to the buying public.  Without the ethical leadership exercised, more than just wages would have been lost by workers. 

The second part of the equation for the pursuit of ethical action is effective communication.  Doing the right thing is seldom an affair conducted in a sterile laboratory-type environment.  It involves jobs, people, emotions, red tape, money and competing interests.  Open and honest communication is imperative for realizing successful ethical results.  The goal is not to convince everyone – disagreement and divergent opinions are facts of business (and life) – but to create an environment of transparency and respect.  Before De Beers began mining on new land in northern Ontario, they communicated with local communities through dozens of town hall meetings.  The effective communication was credited with moving the process forward and creating a foundation for success benefiting multiple stakeholders.  An absence of effective communication can foster distrust and misunderstanding.  A truly ethical company engages and understands important stakeholder matters – not because of the positive PR, but because it’s the right thing. 

Producing ethical outcomes involves leadership since it’s often challenging to go against the flow.  Effective communication includes listening and understanding views from the other side of the table, not just dictating from a rehearsed script.  Business has an obligation to behave ethically because there’s more on the line than the bottom line.