Collaborative Leadership Blog

Leading With a Moral Compass

“Integrity is choosing your thoughts and actions based on values rather than personal gain.” (Anonymous)

Unethical leadership seems to be in the air. What do Uber, Wells Fargo, Mylan, VW, Takata, and GM, have in common? It is a lack of ethical leadership. Each of these companies has found themselves in ethical, legal, regulatory, and financial trouble that has significantly impacted their people, customers, reputations, and their bottom lines. And while these are the ones in the news** there are far too many leaders who are behaving as if financial gain is the only measure of success. It’s not. But unethical leadership can be extremely costly. It cost Wells $190 Million and it reputation to defraud over 2 million customers in credit card sales, and 800,000 in car insurance sales. It will likely take years to recover.

Andrew Leigh, in his book Ethical Leadership (2013), notes that a lack of leadership ethics can:

  • Completely destroy the company and its reputation
  • Reduce access to capital markets
  • Drive down stock prices
  • Result in government fines and regulations, audit and oversight
  • Result in lawsuits and customer defections
  • Produce employee cynicism, lack of trust, and turnover

In fact, another study by L. Trevino, in Managing Business Ethics, found that 1 in 3 employees left their jobs because of the company’s ethics.

It simply doesn’t pay to be unethical.

This is a call for a return to leading with a moral compass, where our principles govern our behavior; where our integrity is more important than sleight of hand, cutting corners, or a few more bucks. It involves a lot more than having a Code of Ethics or a values statement on the wall or in the HR handbook. Leading with a moral compass means leadership turns ethical principles into visible actions, commitments, and behavior. It means creating a leadership culture that has as its fundamental premise that every employee, no matter what their rank, will act honorably and above reproach. In addition, it means:

  • Setting the tone across the organization
  • Creating psychological safety so that the workforce will speak truth to power about unethical conduct
  • Evaluating ethical risks
  • Actively engaging the workforce in a conversation about ethical behavior
  • Performance management that rewards ethical behavior
  • Accountability systems, monitoring, and oversight

It is time we restore the highest set of ethical leadership in every business, which ultimately means it starts at the top, is the essence of the leadership culture, and is made real in actions and accountability.

** Chris Matthews and Matthew Heimer, “The 5 Biggest Corporate Scandals of 2016”, Fortune, 12/28/16

*Dr. Marshall is an Adjunct Professor in Management at the Fuqua School of Business, Duke University; he is an ICF certified executive coach, Top 15 Trust Thought Leader, and author of Building Trust at the Speed of Change. You can contact him at: www.marshallgroup.com, edward.marshall@duke.edu, or  (919)265-9616

 

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