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For quite some time, picking up The
Wall Street Journal meant reading stories rife
with indictments of CFOs, CEOs and accountants. Though
many leaders practice good principles, clearly it
is time to inspect closely what it means to lead with
ethics. The world is full of strong leaders; however,
leadership is a neutral term. It can be good or bad.
Stalin, Hitler, Mussolini, and Mao Tse Tung were regarded
as good political leaders at some point in time by
a certain element of the population. History has proven,
however, that each was guilty of an immoral use of
the tremendous power his leadership afforded him.
What will history tell us about our
current leaders of industry? Are they leading their
companies in an ethical way? Perhaps the best barometer
of achievement in this regard is the sustainable success
of an organization over the long haul. For when you
whittle commerce down to the point of its raison d’être,
you find its ethical basis. Is it not the mission
and ethical imperative of every publicly held establishment
to absorb the cost of doing business, produce a quality
product for its customers, provide sustenance for
its members, and turn a profit that can be reinvested
to make the company stronger for lean times?
One company has been doing this well
for more than 120 years. General Electric’s
recent declining stock values may trouble investors,
but it still was recognized as one of Fortune’s
2002 Global Most Admired Companies and received the
highest marks for its quality of management. Compare
it to the relatively young MCI WorldCom, a company
struggling in a quagmire of ethical issues, and the
sustaining success of GE is clearly manifested.
The following discusses the following
five components of ethical leadership: communication,
quality, collaboration, succession planning, and tenure.
Ethical leaders set the standard of truth for every
employee they lead. The moment people take leadership
positions, they have an opportunity to place the highest
premium on truthfulness. Recent cases of fiscal malfeasance
at Enron, WorldCom and Arthur Andersen illustrate
the need for every form of communication leaders put
forth to be an accurate representation. Yet, leading
by example cannot be the only process by which this
standard is relayed. It must become a company slogan,
from the accounting office to the shop floor, that
"Truth is Job 1." Truthful information is
quality information to the CEO, board of directors,
and investors.
Jim Collins, a noted researcher on leadership,
advises leaders to "conduct autopsies, without
blame," and cites companies such as Philip Morris
whose executives talked openly about the "7-UP
disaster." Even when statistical evidence does
not reflect well on a division or the financial status
of the entire company, a plan of action to thwart
disaster may be implemented and several lessons learned
through open communication to ensure the sustainability
of the organization.
An ethical leader understands that three factors ensure
the global market competitiveness of an organization:
a quality product, quality customer service, and quality
delivery. Leaders must champion the processes of quality
throughout the organization, benchmarking successful
organizations, incorporating innovations in quality,
and setting standards and measurements in every department.
Leaders have several tools to ensure quality. They
don’t have to be Master Black Belts in Six Sigma
or understand all the intricacies of lean manufacturing
or supply chain management to see how each improves
quality. They are sold on the merits of having a quality.
They know that cutting waste translates to saving
time and money for the organization.
It is the leader’s responsibility to drive,
steer, and fund the quality initiative throughout
the organization. For only when top leaders fully
endorse a quality initiative does it have a chance
of becoming fully implemented and the harvest days
of savings can occur.
Bob Galvin, Chairman of Motorola, implemented
Six Sigma throughout the company in the early 1980s.
Just two years after launching Six Sigma, Motorola
was honored with the Malcolm Baldrige National Quality
Award. Even the federal government is investigating
the merits of this management tool. Several local
government agencies are already using Six Sigma, and
the federal government may employ Six Sigma in its
war on terrorism. With a failure rate of 3.4 per million
products/actions or 99.99966 percent accuracy, agencies
would be better informed and lives could be saved
if only one of every 294,000 vital pieces of information…[was]…erroneously
discarded.
Ethical leaders need many advisors. They pick the
most astute within their organizations and hire some
from other companies, but they surround themselves
with answers. Wise leaders collaborate to incorporate
best practices, solve problems, and address the issues
facing their organizations.
Regrettably, the natural tendency of leaders is to
draw in a close, and more often than not, closed circle
of advisors. Unfortunately, the smaller the group,
the less the prospect of collectively providing the
leader advice on the full range of issues facing the
organization. But the leader who collaborates ethically
makes better decisions for the organization.
How is that possible? Leaders who use
ethical collaboration keep their circle of advisors
more open and fluid. The objective of the ethical
leader is to reduce the risks taken by the organization
by assigning trustworthy experts/advisors to every
situation—from R&D decisions to customer-driven
needs. Advisors’ findings determine decisions
of the leader who becomes better equipped to make
judgments based on two critical elements: more feasible
solutions and viable processes needed to exact the
solutions.
Many states suffer the woes of underfunded
education. Recently, South Carolina imposed a 15 percent
budget cut, with more cuts promised in the future.
The President of Clemson University, Jim Barker, pulled
in campus-wide experts in their fields to provide
solutions. Robert McCormick, an internationally known
economist, among others, was assigned the task of
creating a fiscal roadmap to ensure Clemson would
sustain itself through time. While his advisors provided
him with sound solutions, Barker remained focused
on the overall mission of the university and its drive
to become a top-20 public university. Ethical collaboration
serves another important role, however. As Barker
maintains an open and fluid circle of advisors while
assigning the right people to the variety of issues
facing the institution, he serves to broaden his and
others’ awareness of promising internal successors.
If principled leaders possess a need for control,
they satisfy that need by establishing strong organizational
standards and operational procedures for quality and
communication. Yet for the long-term success of the
organization, ethical leaders must set aside issues
of "turf" and let other leaders surface
within the company, giving potential successors opportunities
to exercise and build their leadership skills. Once
identified, these few should be personally mentored
by the leader, given opportunities for 360º communications,
and trained for the roles they may one day assume.
In his book, Good to Great: Why Some
Companies Make the Leap…and Others Don’t,
Jim Collins identifies Chrysler with many organizations
that achieve greatness only to have it slip away through
time. While examining the long list of organizations
in his study, Collins notes that under Lee Iacocca
Chrysler followed "a pattern…found in every
unsustained comparison: a spectacular rise under a
tyrannical disciplinarian, followed by an equally
spectacular decline when the disciplinarian stepped
away, leaving behind no enduring culture of discipline…"
Arguably Chrysler faltered without Iacocca
at the helm because he had failed to practice ethical
collaboration to the point that a succession plan
was devised.
How long should a leader lead? Whereas the most important
leader in the American government leads for four to
eight years, industry has no governing standard to
length of tenure. Should leadership in industry, like
its counterpart in government, have a shelf life?
The answer lies on the conduct of the leader. Leadership
expert Peter Block contends that "We search,
so often in vain, to find leaders we can have faith
in."
Further, he notes that leadership is
more often rated on the trustworthiness of the individual
than on his or her particular talents, and that the
mission of the ethical leader is to serve the institution
and not themselves. Jim Collins identifies this category
of executives as Level 5 Leaders: leaders who are
able to "channel their ego needs away from themselves
and into the larger goal of building a great company."
Ethical leaders collaborate and provide
their organizations succession plans that ensure the
growth of the organization over time. They feel that
they lead at the request of the company, customers,
board of directors, and stockholders. If each of these
entities’ trust in the leader remains unchallenged,
the leader should lead until he or she chooses to
step down. However, whereas even the best of leaders
turn the company over to a new set of watchful eyes
eventually, the leader who is irreparably jeopardizing
the sacred trust of employees, customers, and the
public at large should step aside and let a better
leader take the helm.
Much has been written about leadership. Regrettably,
less time and thought has been afforded the concept
of ethical leadership. Perhaps it is the very lack
of discussion about what it means to lead with ethics
that has created the current business environment
of SEC investigations into improprieties, dot-com
greed, and the general public’s lack of faith
in the stock market. Though we would have preferred
that the government did not have to force the issue
of business propriety through threats and legislation,
apparently for some leaders fear and not moral certitude
is their personal motivator.
Excerpted from a section written by
Laurie Haughey, appearing in The Business Ethics
Activity Book: 50 Exercises for Promoting Integrity
at Work by Marlene Carosolli. Published by AMACOM
Books, a division of American Management Association,
New York, NY.
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