Ethical Leadership
Ethical Leadership
Ethical Leadership
There are no universally agreed rules of ethics, no absolute standards or controls, and no
fixed and firm reference points. This is fascinating given how hugely important ethics have
now become in modern life and society.
what is ethical?
This explanation attempts to go deeper than the usual descriptions of ethical
organisations, because ethics in work and business are both a reflection
of andinfluenced by ethical aspects of life and the wider world.
The aim of this article not to tell you what's ethical and what's not. The aim is to
help you to determine better for yourself what is ethical and what is unethical.
What is ethical anyhow?
The short answer is that there isn't an answer. There is no absolute rule of what is
ethical and what isn't.
Defining what ethical and unethical mean is only a little easier.
A simpler broad definition of the word ethical is 'fair'. And 'fair' to fair-minded
people, especially those affected by the situation. This is not a scientifically
robust definition, but as you will see, when we peel back the layers of what is
ethical, it's very difficult to be scientific and firm about what it all means.
The modern Oxford English Dictionary says:
"Ethical - Relating to moral principles or the branch of knowledge dealing with these..."
Interestingly the definition continues by way of example: "...Morally correct: Can a
profitable business ever be ethical?..."
N.B. This is merely an example of the word in use - it's not an opinion - nevertheless it's an
example which reflects modern attitudes and the context in which ethical questions now
arise which would not readily have done so a generation or two ago.
Morals and morality appear commonly in attempts to define what ethical means, although
given the difficulties of defining the word morality without using quite subjective terms,
this is not terribly helpful. Morality incidentally is defined in the OED as '...principles
concerning the distinction between right and wrong or good and bad behaviour..." See what
I mean?.. Not especially firm or scientific.
More helpfully the OED adds some extra explanation about ethics, summarised thus:
Western ethical philosophy can be divided roughly into three types:
1.
Virtues such as justice, charity and generosity benefit the person and the person's
society. (Largely based on Aristotle's ideas.)
2.
Ethics are central to morality - a human duty - based on rational people's respect for
other rational people. (Notably supported by Kant.)
3.
The guiding principle is based on conduct which produces the greatest happiness or
benefit to the greatest number of people. (Referred to as utilitarianism - this might be also
be considered 'the greater good' concept.)
A single precise definition of ethical is not easy to agree.
Moreover to show how ideas change over time, the 1933 Oxford English Dictionary says
first of ethics (when seemingly the word 'ethic' was used as an adjective like today's use of
the word ethical):
1.
2.
3.
Certain ethical issues are represented in law, and in this respect are firm, to a point. (See
the notes about ethics and law below.)
Ethics which are not covered clearly by law are usually a matter of subjective judgement,
especially, but not exclusively, by the reasonable majority, whose view is significant in
deciding whether something is ethical or not.
Such a vague way of judging whether something is ethical is not to diminish the importance
of ethical factors. On the contrary.
In work and life, opinion - especially large scale opinion - can be more influential than
rules and law, notably in relation to markets, publicity, and people's attitudes, which
manifest especially in the behaviour of customers and employees.
The law can actually have a theoretical or marginal effect, whereas large scale opinion is an
unavoidable powerful reality.
For example it is unlawful to drive a little faster than the speed limit. But the vast majority
of people consider it to be acceptable, and so do it. The UK poll tax of the 1980s was
lawful, yet public reaction (much of it unlawful) against it caused the law to be changed.
Ultimately people's attitudes are more powerful than law. Law is a reflection of public
tolerance and views, not a cause of them (unless to produce a reaction against the law of
course).
So do not for a moment underestimate the importance of ethical considerations on the basis
that they could be subjectively judged and difficult to define in law. Popular public opinion
is the sternest most unforgiving measurement of all.
It is possible to go so far only in outlining ethical considerations, and to give some modern
examples of interpretation which seem generally to be accepted.
Ethical investment is a useful aspect for considering ethical business, since large scale
investment is ultimately subject to market forces, which largely reflect public opinion. As
such ethical investment criteria and examples tend to be a good guide towards ethical
attitudes of large sections of people and society, rather than the 'expert' views of leaders and
gurus.
Ethical investment has been a growing aspect of business investment since the 1970s,
although arguably the first types of ethical businesses can be traced back to the Quaker and
Methodist movements of the 1800s.
Then as now ethical business and investments regard socially responsible activities and
aims with far greater priority and emphasis than the traditional profit and free market
business approach.
Traditional profit-based business models, which arose and came to dominate global
commerce from the beginnings of industrialisation, inherently do not require a socially
responsible element, other than compliance with the law, and a reflection of public reaction
for pragmatic marketing (and ultimately profit) purposes.
Ethical business or investment is concerned with how profit is made and how much profit
is made, whereas traditional profit-centred free-market based business is essentially only
concerned with how much profit is made.
Traditional profit-centred business seeks to maximise profit and return on investment with
no particular regard for how the profits are made and what the social effects of the business
activities are.
The ethical approach to business and investment seeks to maximise profit and return on
investment while minimising and avoiding where possible negative social effects.
In this context 'social' and 'socially responsible' include related factors such as:
the environment
sustainability
local community
tobacco
armaments
nuclear power
animal experimentation
Standards of what is considered ethical change over time, and generally these standards
become more humane as humankind develops greater tolerance, awareness, and capacity
for forgiveness and compassion.
Humankind's - or any society's - capacity for ethical behaviour increases with its own safety
and confidence of survival and procreation.
Hence the human tendency to become less ethically flexible when under threat.
Thus ethical behaviour is a relative judgement, as well as a subjective one. We cannot
impose one society's moral code onto another society with different needs and demands.
Interestingly what is considered unethical in present times, commonly becomes unlawful in
the future. The leading ethical thinking of any time tends to pioneer social and civilization
change.
And so here lies substantial advantage for corporations and other groups and bodies which
anticipate such changes. They adapt quicker, and are seen generally to lead rather than
follow. They also manage change more successfully, since they have time to do it.
Organisations and institutions which fall behind public ethical expectations find catching up
a lot more difficult.
Notable examples are situations in which the law, or the way law is applied, is considered
unethical ('wrong' is the typical description) by sufficient numbers of people to pressure the
legal system to change. You can perhaps think of examples when this has happened, and
such cases are examples of an ethical viewpoint being ultimately more powerful than the
law.
Examples of this happening through (Western) history illustrate the tendency for ethical
considerations to drive the law: women's suffrage (women's right to vote); the abolition of
slavery; and modern human rights and equality legislation are examples of ethical pressures
causing change in law.
The independence of nations and the break-up of colonial rule are further examples of
ethical pressures overwhelming the force of law.
Unlawful acts are not always unethical. Ethical acts are not always lawful.
Lawful therefore does not equate to ethical, and unethical does not equate to unlawful.
Interestingly, the UK Consumer Protection Regulations effective on 26 May 2008 are a
good example of unethical business practices becoming prohibited in law. For example it
has always been unethical to mislead customers into buying products or services. Now it is
illegal to do so (in respect of consumers - here are the implications of the regulations).
For people who are not religious, or who have a different religious faith to decision-maker,
these words are a little disturbing in the context of ethical decision-making.
Whose god? Your god? My god? Their god? All gods? The good gods? The collective gods
committee?
And when? When will (the whatever chosen) god be judging this decision? While the
decision is being made? Before the decision is implemented? Immediately after the
decision's implementation (when on Earth some serious monitoring, checking and
managing needs to be happening)? Far into the future when the decision-maker has expired
and gone to whatever version of heaven his (it's generally a man) particular faith promises
him?
The inference is the latter of course. A bit bloody late in other words.
And by what criteria will (the whatever chosen) god be judging the decision? To whose and
with precisely what standards are we being asked to agree here?
And what will be the results of (whatever chosen) god's decision, especially if it's a mighty
god-like thumbs down? What are (the whatever chosen) god's contingencies for putting it
all straight again?
It's anyone's guess..
Do you see how religion is not a brilliant aid for decision-making.
Religion is a personal matter. It has no place in decision-making affecting other people.
Worse, using religion as a personal safety net for serious decision-making is a reckless
desertion of leadership responsibility.
Right-minded people want leaders to take ultimate full absolute responsibility for decisions.
They do not want a leader to seek refuge or personal salvation in (whatever chosen) god or
heaven or a confession box.
This is an additional reason for not mixing religion with leadership and ethical decisionmaking: too many people simply do not accept the basic premise that a leader can delegate
responsibility in such a very strange and unaccountable way.
Aside from anything else, if religion were useful in leadership and decision-making then all
human organisations would be run by the clergy. Civilization tried that a few thousand years
ago and it doesn't work.
Please note: If you are religious and believe that religion has a place in leadership and
decision-making then you might disagree with this section. If so please understand that I am
not berating religion or religious people. I accept that through humankind's existence especially in the last few hundred years - religion in various forms has often provided an
essential code (of ethics arguably) for civilizations and societies to live positively,
harmoniously, generously, peacefully, lovingly, etc. I am making a different point, namely:
reference to religion, and especially a strong personal faith, is not generally very helpful
towards achieving great objectivity, which is vital for ethical decision-making. Moreover
religion of certain types can be extremely divisive, which is obviously not useful for
decision-making entailing diverse groups of people, as commonly arises in today's
increasingly diverse world.
anything unlawful in the territory or area covered by such law - is probably unethical.
Not always - see ethics and law.
Conversely, and more importantly, very many legal activities and behaviours can be
extremely unethical. For example, behaviours that are not necessarily unlawful but which
are generally considered to be unethical to Western society would now typically include:
excessive profit
greed
inertia-based 'approvals' and 'agreements' (in which action proceeds unless objected
to)
coercion or inducement
betrayal of trust
breaking confidentiality
unfairness
unkindness
god-like appreciation of a wide and complex situation, instead of adopting a less personal
and more detached approach.
The combination of the following factors in ethical decision-making is rarely effective:
risk
borderline ethical/unethical
Objectivity is the key to ethics, not personal belief or religion or personal power.
Leaders who make decisions subjectively and personally for reasons of building power,
reputation and wealth, entirely miss the point about ethics, and their fundamental
philosophy (or lack of) effectively prevents any real ethical objectivity.
If the motive is wrong, then everything else will be too.
ethical objectivity
So, law alone is not a basis for ethical decision-making. Nor is religion. Nor is 'the greater
good'. And even the rational views and needs of the affected majority are not a basis alone
for ethical decision-making.
So what is the basis of ethical decision-making?
My best suggestion is:
Objectivity and fairness are the basis of ethical decision-making.
In simple terms this means you must be able to see the other people's points of view. This
might seem a simple statement of the bleeding obvious, and it might be, but it is not often
practised. True objectivity is quite difficult to achieve, especially for leaders under pressure.
Similarly, fairness is difficult to define, let alone apply.
Detachment is a huge part of the process. Objectivity is impossible without personal
detachment. Fairness cannot begin to be achieved without detachment, since it's about other
people, not the leader, nor the leader's supporters and environment.
Being ethical is not a matter of evangelizing or imposing your standards and views on other
people. (See Transactional Analysis to understand why people behave in this overly
paternalistic way.)
Being ethical is being fair. Being fair means understanding implications from other people's
perspectives - not your own. The more widely and well you appreciate other people's issues
and implications, then the easier you will find it to be ethical.
Cybernetics is a really useful way to look at objectivity. Objectivity entails understanding
how systems work and inter-relate. But systems here means merely the general sense of
people and the way life is organised. Systems does not refer to complex mathematics or
scientific formulae. Again, it requires you to step back - to detach yourself, resist personal
bias and emotion - step back, be objective, adult, mature - fair.
Objectivity is a wonderfully potent and extremely flexible ability to pursue. Especially if
you can combine it with the ability to facilitate rather than influence.
Objectivity is flexible because it can be approached and achieved in so many different ways
- intuitively, logically, systematically, creatively - anyone can do it. In the same way that the
truth - purity, probity - is available to anyone who cares to look for it.
What does ethical objectivity entail?
Here are some suggestions of the main angles.
The list is not exhaustive - you will see other significant perspectives for different
situations. For small local decisions most of the list might not apply. But if your decision
has potentially significant effects, consider these different perspectives in striving for as
much objectivity as you can.
Ethical considerations comprise several variables in one combination or another, if you are
striving for real objectivity:
'The greater good' - the flip-side of the issue; i.e., what are the other options and their
consequences - the costs or implications of the choices?
Cultural issues.
Religious influence and personal beliefs - of those affected, rather than the decisionmakers, really, I cannot emphasise this enough. Religion is a subjective belief system. Your
own religion is therefore not a basis for objective ethical decision-making.
Majority views.
Step back from every decision before you make it and look at it objectively. Use the
above list of examples of unethical behaviours as a check-list to see if you might possibly
be falling into one of these traps. It's easily done: to get swept along by excitement and
urgency; or by apparently demanding expectations, whether self-imposed or otherwise. Aim
for objectivity and fairness - not for personal power, 'winning', strategic plotting, high
drama, etc.
2.
Strive for fairness rather than polarised 'winner takes all' outcomes. Try to facilitate
solutions rather than actually deciding and imposing decisions, unless all parties are happy
for you to do so.
3.
Understand the Psychological Contract and how it applies to your situation. Concepts
such as Empathy and the Johari Window are useful in gaining appreciation of other people's
situations and feelings, which is central to managing the Psychological Contract.
4.
Learn from history and previous situations. Reviewing how previous situations were
handled reduces the risks of making daft mistakes: not many things are fundamentally new
in this world, despite how unique you believe your situation to be. Also history is a superb
store of already invented wheels, which can often save you the time and agonies of trying
unsuccessfully to invent a new one.
5.
Get the facts from all possible perspectives. Often a challenging issue offers three
main options: (a) your instinctive or personal view; (b) a main alternative option; and (c)
the commonly under-estimated ever-available third main option of doing nothing. Doing
nothing in times of real emergency can be disastrous, but for a very large number of
situations doing nothing is the only truly wise way. Doing nothing is not weakness or
procrastination if it done in the right way for the right reasons.
6.
Understand the long-term consequences. Model or brainstorm the 'what if' scenarios.
Again look at previous examples and history.
7.
Check the law. In whatever territories are affected by the decision. But do not base
your decision wholly on the law. See the ethics and law notes.
8.
Consult widely - especially with critical people, and especially beyond your close
circle of (normally) biased and friendly advisors, colleagues, friends, etc. You have not
properly consulted if you merely seek and obtain confirmation from a tame advisor. After
the event such 'consultation' can very easily be interpreted as a conspiracy, in which your
'advisor' is deemed not to have been an advisor but a co-conspirator. Consult especially the
people affected by the situation and potential actions, and if using a survey of any sort then
ensure the positioning and questions used are balanced and objective, because to be
otherwise is unethical in itself. You should even consult about how to frame the survey and
wording of the questions if the issue is anything but a minor one.
9.
Consider cause and effect in the deepest possible sense. Life and all that surrounds it
is one huge interconnected system. If you are making big decisions - or even apparently
little fleeting decisions within a potentially big and sensitive environment - these decisions
will affect many people and aspects of life, now and especially into the future.
10.
Resist the delusion and arrogance that power and authority tends to foster. This is
especially important to guard against if you live and work in a protected, insulated or
isolated situation, as many large scale leaders and decision-makers tend to do. Being a
leader for a long time, or for any duration in a culture of arrogance, privilege and
advantage, provides great nourishment for personal delusion. Many unethical decisions are
borne of arrogance and delusion. Guard against becoming so dangerous.
11.
12.
Aim for solutions and harmony, objectivity and detachment. Facilitate rather than
influence. Help, don't sell. Diffuse situations - find common ground - don't polarise or
inflame. Whenever you see a big swell of expectation looming (among your immediate
team, not those affected by your decision) which is borderline ethical/unethical, remember
the ever-available third option to decide clearly and firmly to do nothing, in the right way
for the right reason. The best ethical decisions are usually decided by people who are most
affected by them, rather than by leaders who don't trust the people.
These are essentially idealistic views and as such will mostly appeal to idealistic people.
If you are an idealist, remember that not everyone is idealistic.
For example, many entrepreneurial personalities are actually more likely to prefer and
utilise logical and critical thinking, and relatively dispassionate decision-making, than
idealistic principles. These qualities enable entrepreneurs to do what they do well, and most
organisations need a good sprinkling of these types of people. These personalities need firm
reasons as to why the triple bottom line and ethics and CSR are important to achieving solid
performance outcomes.
Process-oriented people; routine-centred, reliable, dependable types, will also not
automatically buy in to idealistic principles, because these people are strongly focused on
facts and real data, rather than ideas and feelings. These people will often need systemic
evidence and predictable processes to assimilate and support idealistic concepts and
philosophies.
People won't simply buy in to the ethical zeitgeist because they are told to.
Therefore when explaining the importance and aims of corporate ethics, consider the
audience. People have different strengths and styles, and some need their own reasons for
buying in to idealistic aims, outside of idealism itself.
Idealists and humanitarians usually have difficulty accepting that processes and financials
should be the primary drivers of organisations. By the same token, people who are driven
and motivated by concrete thinking and performance outcomes will not naturally accept that
organisations should place significant emphasis on idealistic humanitarian philosophies and
aims.
Aside from explanation and understanding, we must also be careful to manage the mix of
organisational obligations. Without efficiency, competitiveness and profit, there'll be no
organisation to look after the people and planet. It's a question of balance.
As ever we need different people's strengths to be able to achieve this. (And while this is an
over-simplification), some people are better taking care of the profit, some the people, and
some the planet - but everyone needs to be aware of all three, and the fact that the future
great organisations will be the ones whose people can best manage the mix.
See the triple bottom line exercise for ideas about getting the ball rolling, if you've not
already done so.
See also the globalisation debate exercise, designed to help highlight issues and actions.
know how to deal with it quickly and openly and honestly. People tend to forgive
organisations who are genuinely trying to do the right thing. People do not forgive, and are
actually deeply insulted by, organisations who fail and then fail again by not addressing the
problem and the root cause. Arrogant leaders share this weird delusion that no-one can see
what they're up to. Years ago maybe they could hide, but now there's absolutely no hiding
place.
legal and regulatory reasons - soon there'll be no choice anyway - all organisations will
have to comply with proper ethical and socially responsible standards. And these standards
and compliance mechanisms will be global. Welcome to the age of transparency and
accountability. So it makes sense to change before you are forced to.
legacy - even the most deluded leaders will admit in the cold light of day that they'd prefer
to be remembered for doing something good, rather than making a pile of money or
building a great big empire. It's human nature to be good. Humankind would not have
survived were this not so. The greedy and the deluded have traditionally been able to persist
with unethical irresponsible behaviour because there's been nothing much stopping them, or
reminding them that maybe there is another way. But no longer. Part of the re-shaping of
attitudes and expectations is that making a pile of money, and building a great big empire,
are becoming stigmatised. What's so great about leaving behind a pile of money or a great
big empire if it's been at the cost of others' well-being, or the health of the planet? The
ethics and responsibility zeitgeist is fundamentally changing the view of what a lifetime
legacy should be and can be. And this will change the deeper aspirations of leaders, present
and future, who can now see more clearly what a real legacy is.
2.
effect - have I fully considered the harmful effects of my decision and how to avoid
them?
3.
A stakeholder is any group of people who could lose or gain something because of the
actions of the organisation.
This is especially relevant in the context of ethics, corporate responsibility, sustainability,
etc.
In fact every person on this earth is arguably a stakeholder in every organisation on
this earth.
It's not acceptable to dismiss or deny a group as a stakeholder on the basis that the
relationship is too difficult to measure. If the group is affected by the organisation then it's a
stakeholder and the group's needs must be considered. Thus the organisation acknowledges
its full responsibilities.
The question is then one of type and degree - in other words the needs of each stakeholder,
and the extent of the effect of the organisation on each stakeholder.
So a good modern stakeholder model or analysis would be one which recognises all of the
stakeholder and then identifies a relationship (needs and interests, etc), and also shows a
degree of impact for each stakeholder. Such an analysis can be helpful in training and
development, and is arguably also essential in strategic planning and decision-making.
Some impacts might seem small, but if the size of the stakeholder group is very large then
the overall impact might be considerable.
By accepting that stakeholders are represented by a far wider range of people and groups
than conventionally applied, we effectively expand and liberate the appreciation of what
organisational (and leadership and management) responsibility really is, and how far it
extends.
For example, a villager in deepest Africa is a stakeholder in all UK organisations given their
(our) effect on the world's natural shared resources and the natural world as a whole.
Children yet to be born on the other side of the world are stakeholders of any organisation
given that its activities use, deplete, spoil, (or preferably instead) protect, enhance, and
improve the resources and quality of life available to future generations.
Failure to recognise these more distant and less obvious groupings as 'stakeholders' is what
has enabled organisations to ignore their wider responsibilities both to local communities
and to the rest of the world beyond.
Stakeholders can be found in any or all of the following groups depending on the type of
organisation. Below are examples of stakeholder groups, including conventional 'investor'
stakeholders, and more modern stakeholder ideas. Remember, a stakeholder is any group
that is affected in one way or another by the activities of an organisation.
shareholders
trustees
guarantors
investors
funding bodies
distribution partners
marketing partners
licensors
licensees
approving bodies
regulatory authorities
advisors and consultants (yes, these people have something at stake too)
customers
suppliers
international communities
humankind
Many of these groups would not conventionally be considered to be stakeholders, but think
about it: each of these groups could have an interest in and could be affected by the
activities of an organisation. If a connection is not easy to see and understand it doesn't
mean the connection doesn't exist.
Given that this sort of modern stakeholder perspective produces such a wide-ranging and
extensive list of stakeholder groups, it's essential to apply (for any given situation) some
method of evaluating and expressing relative stakeholder interests and needs, and also to
measure and show the varying significance of the stakeholder relationships; the degree of
impact or dependence.
Logically, this can be achieved via some sort of 'weighted analysis', designed to assess,
analyse, compile and prioritise all stakeholder needs for any given organisation and
operating scenario. This is not a precise science, but again, the difficulty in measuring the
impact is no excuse for denying the existence of the relationship, the stakeholding, and the
organisational responsibility for the stakeholder group concerned. Below is a suggested
basic template for this purpose, which you can adapt for your own situation.