Can you afford to lead without integrity?

There is little doubt that ethical standards across many different industries and sectors have been called into significant question, from competition investigations into the LIBOR rate-setting process; scandals relating to the appalling suffering of patients both within the National Health Service and private hospitals - such as Mid-Staffordshire and Winterbourne View - as well as scandals relating to product mis-selling in the financial sector.

“A lack of personal responsibility has been commonplace throughout the industry. Senior figures have continued to shelter behind an accountability firewall!”

Equally, there is little doubt that embedding ethical cultures within organisations is a difficult task. Whilst regulation has a role to play in deterring unethical conduct and promoting appropriate behaviour, ultimate responsibility, clearly, has to lie with organisations and individuals.

The Business Case

Public perception, often driven by the media, can damage a company’s reputation and weaken its brand value. Lowered trust among investors can devastate an organisation’s ability to attract support for growth. In the same way, regulators and law-makers may move swiftly to punish and or further regulate those who step outside accepted ethical boundaries.

There have been numerous objections to the introduction of a legal requirement to act ethically, one important one is that it would not give guidance as to how a person should behave. Ethics vary according to the issues at hand and are very much a metter of judgement.

“Need to create a speak-up culture - committed to ethics”

Arguably, ethics is simply about how a person chooses to act because of who they are, and not because of what they are required to do by law. The more one places a reliance on the law as a substitute for taking responsible decisions, the more one devalues ethics as it then becomes a question about what is required, rather than what is just the right thing to do. This then encourages a box-ticking approach to compliance, adhering only to the specifics of their interpretation of the regulations, rather than pursuing an approach that is truly in keeping with the spirit of the requirement.

An increasing number of organisations recognise the need to focus more carefully on their total corporate contribution and all are critically aware of the risk that “the simple statement, or strapline”, can be seen by some as a cynical response rather than a genuine commitment. Companies who have given serious thought to this issue recognise that in today’s web-enabled world, even the smallest gaps between the positive words and the hard actions to back them up, will be quickly exposed and probed in the media. However, when these commitments are seen to be genuine, they earn trust.

Trust is a very evocative word in the business world. It means different things to different people, depending on their gender, ethnicity, culture, background and geography. Corporate behaviour is definitely under the microscope with widespread perception of a disconnect between corporate behaviour and ethical conduct. In this climate, it would be very easy to jump to measurement and greater legal requirements. Whilst issues such as compliance are a vital aspect of good governance, recent research published by Roger Steare and colleagues indicates a strong relationship between ethical leadership and performance as well as ethics being key to employee engagement.

Clearly, there is a need to go back to basics to define what ethical behaviour means both for the individual and the organisation. Those organisations that have travelled this route have benefited from creating a ‘speak-up’ culture; confidence in the market as well as commitment from employees who buy-into the idea that ‘good thinking = good business’.

Hiroo Chothia is Managing Director of Insight Business Development and Senior Partner at the8group - an expert development consultancy, assisting clients to create a culture of leadership through innovative learning, behavioural change and improved performance.