By Vicky Smith
Everything rises and falls on leadership.
In the last few years we have watched companies such as Enron, Nortel and the Martha Stewart empire implode because of leadership practices based on greed and self-interest.
Former WorldCom chief executive Bernard Ebbers leaves Federal Court in New York in January after a pre-trial hearing in relation to the criminal fraud and conspiracy charges he faces. Cases such as his have created a public distrust of corporate leadership, says careers columnist Vicky Smith. While a culture of ethics begins with the leader, every employee has a role to play in fostering, or demanding, ethical behaviour, Smith says.
James Kouzes paints the following picture about the state of affairs of leadership in his book The Leadership Challenge: "The cynics are winning. People are fed up. They're angry, disgusted and pessimistic about their future. Alienation is higher than it's been in a quarter-century. Our loyalty to institutions -- and institutions' loyalty to people -- is sinking like a stone. In such a climate, how can a leader possibly engage employees and build trust?"
Maintaining ethics in our complicated business environment driven by bottom-line results, competitive edge and shareholder satisfaction is a conundrum for leaders.
Ethics, by one definition, is the determination of right and wrong using standards of appropriate conduct or behaviour for members of a profession.
We have laws and many professions have a code of ethics that dictates how we should conduct ourselves. But there is a huge grey area in which we make decisions each day that constantly erode our ethical boundaries.
When I think of my most difficult ethical decisions as chief executive, they often put my job or career at risk. I needed to remind myself corporate leadership starts with personal leadership.
I could only resolve the conflicts and contradictions of leadership if I maintained a set of ethical standards on which to base my decisions.
The outcome I wanted from each decision was that I continued to foster trust and employees felt empowered to question my decisions.
A report on a Conference Board survey on ethics' states: "While a large majority of firms surveyed have toll-free hotlines for employees to report concerns about ethical lapses, 69% of the executives say that fear of retaliation is a big issue in their companies. Only 6% say their company has a 'culture of dissent' where employees can openly speak their minds."
Pratima Bansal and Sonia Kandola in their article "Corporate Social Responsibility: Why Good People Behave Badly in Organizations," published in the Ivey Business Journal, discuss what caused Enron's and Arthur Andersen's socially irresponsible actions and disregard for ethical principles.
Bansal and Kandola share a story about a 28-year-old woman's murder in New York. There were 38 witnesses to the assault. The assailant returned to the scene of the crime three times over a period of 30 minutes, but it was not until the final stabbing that an observer finally called the police. The community was shocked that not one witness had tried to stop the killing. Social scientists commonly call this behaviour the "bystander effect," where people have a tendency not to intervene in emergency situations.
The bystander effect was seen at Arthur Andersen where, it is believed, most of the audit team likely was aware of the accounting irregularities.
Ironically, people were aware that individuals were acting unethically, yet they did nothing to intervene because they assumed that keeping silent was the expected norm, Bansal and Kandola stated.
We would like to believe we would not stand by while someone was being murdered or knowingly condone fraud. At some point in life, all of us hit a crossroads requiring us to decide whether to engage in an unethical practice.
According to Kenneth Blanchard and Norman Vincent Peale, authors of The Power of Ethical Management, there are three questions you should ask yourself whenever you are faced with an ethical dilemma.
Is it legal? In other words, will you be violating any criminal laws, civil laws or company policies by engaging in this activity?
Is it balanced? Is it fair to all parties concerned both in the short-term as well as the long-term? Is this a win-win situation for those directly as well as indirectly involved?
Is it right? Most of us know the difference between right and wrong, but when push comes to shove, how does this decision make you feel about yourself? Are you proud of yourself for making this decision? Would you like others to know you made the decision you did?
When everything else is stripped away, all we really have is our integrity. The answer to the question "Am I proud of my decision?" will always demonstrate where we have drawn the ethical line in the grey world of business decisions we need to make.
Vicky Smith is owner of Contact Human Resource Group, which is internationally partnered with Express Personnel Services.
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