Building a culture of responsible leadership that earns the respect of all stakeholders is challenging. In the last several articles I talk about culture, define it and how important it is to the successful outcomes of any organization. And I continue to emphasize that a culture that is built on sound ethical principles has a better opportunity to flourish and profit than one which does not.
A lack of responsible leadership costs everyone as we have so clearly seen with the headlines of continued company “mishaps.” Veronica Melion, whom I’ve quoted before, states in the 2017 Deloitte Director’s Alert article, “culture is the basis of an organization.”
She says, and I and others agree, that it absolutely influences how employees work on a daily basis. If the organization’s leadership is skewed rewarding profits before integrity, taking advantage of customers and employees, slipping and sliding on expense reports, not holding its employees accountable, well it’s no surprise when employees don’t uphold the companies supposed “principles.”
I believe that paying lip service to a culture which does not embrace truth, trust and transparency shows a lack of respect for all stakeholders. So what’s the problem that in so many organizations culture is only paid lip service? Ms. Melian says companies “pay less attention to the organization’s culture, which can be difficult to measure and manage and was often left to evolve on its own.”
Yet culture must be managed for the good of the company, its customers and its employees. In fact, studies have shown that culture is the number one determinant of future shareholder value. The article notes “misaligned incentives were a primary factor behind the unethical behavior demonstrated during the 2008 financial crisis and are often cited for influencing corporate failure.”
Culture and responsible leadership go hand in hand. If the way things are done around here reward anything goes, then anything goes. As Dr. Dan Ariely, the James B. Duke Professor of Psychology and Behavioral Economics at Duke University says, even when there is training in ethics and a code of conduct, if employees are not really expected to follow the code and act ethically, then they often do not do so. But as Dr. Ariely tells us, if we remind people of the code of ethics they have been trained in, if we hold ourselves to the highest standards, if honesty is expected, it often becomes the reality.
How can an organization function at the highest level if, for example as Deloitte’s 2016 Human Capital Trends survey states, only 28% of the survey’s respondents indicated they truly understood their culture, although 87% believed that “culture is a potential competitive advantage.” And only 19% of CEOs and human resource leaders who responded indicate their organizations has the “right culture,” and more than half noted that their companies were attempting to change the culture in response to shifting talent markets and increased competition and they are not there yet.
These are not good odds. Is responsible leadership taken into consideration when a CEO’s performance is evaluated, or do we base evaluations strictly on the profits he or she has brought in? Culture, truth, ethics and transparency needs to play a bigger role in the hiring of the C-Suite.
So what are the key elements? In your organization are employees encouraged to be forthright, is their feedback valued, do they take ownership, are they engaged? Ms. Melian suggests that periodically the company assess what people will do in real life situations, such as meeting performance measures, awareness of unethical behaviors, and pressure to do what is not above board.
Challenging, yet this can be achieved, as the best companies to work for can attest to. The North Texas Ethics Association (NTEA) has honored more than 40 local companies with the Greater Dallas Business Ethics Award (GDBEA) since its beginning in 2000. As the website says of the award: “These companies exemplify how ethics can be consciously integrated throughout an entire business.”
In the last GDBEA award ceremony Craig Hall, Dallas business leader and philanthropist, noted that if shortcuts are taken, you never know when this will come back to haunt you. He also emphasized that ethics today are more important than ever because of the greed being displayed everywhere. And we are always being tested and we need to ask ourselves often, are we taking the easy way or do we take a stand and do the right thing?
Yes, responsible leadership does exist as our friends at the North Texas Ethics Association can attest to.
I’ve referenced the work of James M. Kouzes and Barry Z. Posner before. Their seminal work, The Leadership Challenge, is masterful in its research and outline of what responsible, concerned and caring leaders do to build organizations of truth, trust and transparency.
The authors emphasize that culture starts at the top.
Their survey shows that employees expect their leaders to be honest, competent, inspiring and forward-looking. Honest was a recurring trait in all cultures they surveyed here and abroad.
Employees not only want their leaders to be honest, they want to be sure that the individual is worthy of their trust, that they are truthful, ethical, and principled. Integrity and authority were synonymous with honesty.
[bctt tweet=”Employees not only want their leaders to be honest, they want to be sure that the individual is worthy of their trust.” username=”RichardMBowen”]
We don’t see a lot of these attributes exhibited lately. Yet they are critical. According to the authors, “When people follow someone they believed to be dishonest, they come to realize that they’ve compromised their own integrity.”
A culture of trust, authenticity, transparency and integrity builds loyalty. Loyalty to the company and its mission is an essential element in instilling a culture that can be embraced.
Yet less than half of all employees of all U.S. companies now consider their employees to be worthy of their loyalty.
Some leaders have actually concluded that loyalty is no longer relevant to modern society! Who are we kidding??
[bctt tweet=”Some leaders have actually concluded that loyalty is no longer relevant to modern society! Who are we kidding??” username=”RichardMBowen”]
Now more than ever more employees want their leaders and institutions to be worthy of their trust and commitment. Loyalty still remains the measure by which responsible leaders are held.
Related Posts
– Culture Is the Way We Do Things Here
– Boards Must Take Responsibility!
– Ethical Behavior Pays Off
Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.
