The Ethical Leader – Morgen Witzel
The one sentence summary: Doing the right thing can be the key to competitive advantage.
WHAT THE BOOK SAYS
Ethical behaviour by businesses is often seen as the corporate and social responsibility icing on the cake – nice to do but never really essential. Changing this to make ethical behaviour a primary focus is vital for long-term competitive advantage.
This needs to go deeper than something managers do out of a sense of moral duty. They need to build trust through ethical behaviour and regular, honest communication.
By way of background: There are many types of ethics, but the four main ones are:
- Deontology: rules based, right and wrong actions, consequences of actions are not important (so long as you have done the ‘right’ thing). The rules give a strong reference point, but strict interpretation can lead to injustice.
- Consequentialism: consequences of actions are more important than the actions themselves, judgement of good versus bad, greatest good for the greatest number (utilitarianism), ends justify the means. Focus on outcomes frees us from restriction of rules, but could lead to cheating in order to get the right outcome.
- Pragmatism: ends and means cannot be separated, no hard and fast rules, each situation is different, an experimental approach. This is practical, but it can be difficult to know what correct behaviour is.
- Virtue ethics: deliberate choice, collect the facts then decide, practical wisdom, cultivation of virtue. Reliance on self rather than rules is admirable, but requires people with sufficient virtue and wisdom.
The thread running through all of this is moral responsibility: being ethical is down to us.
Overall, there are three ethics tests:
- Are you treating others as you would want to be treated?
- Would you be comfortable if your reasoning and decision were to be publicised?
- Would you be comfortable if your children were observing?
WHAT’S GOOD ABOUT IT
The ethical value chain has five elements that should be enacted through employees, customers, community and shareholders:
- Establishing the ethical position: equity, fairness, trust, working together
- Communicating values and standards: leadership by example, authenticity, using marketing and advertising honestly, deeds are better than words
- Motivating others: seeking commitment, maintaining value and quality, supporting people
- Monitoring ethical performance: looking out for exceptions, watching the impact of what we do, resisting short-term pressures
- Ensuring continuity: ensuring standards don’t slip
There are various frameworks to work out what the correct ethical approach should be (including The Nash Framework, The Josephson Institute Framework, The Markkula Framework, and The Flat White Framework). Some of the best questions include:
- Whom could your decision or action injure?
- Are you confident that your position will be as valid over a long period of time as it seems now?
- Could you disclose without qualms your decision or action to your boss, your CEO, the board of directors, your family, or society as a whole?
- Will this survive the sunlight test? Should your actions become public knowledge, would you be happy to stand up and justify them?
- Why accept marketing and advertising techniques that many of us, business leaders included, know are ethically dubious and morally damaging?
“I would rather lose a hundred million dollars than a night’s sleep.” R. Narayana Murthy, founder of Infosys
WHAT YOU HAVE TO WATCH
The book is more about ethics than leadership.