"Doing the Right Thing is the Right Thing to Do"

In difficult times, it is even more important to understand the positive effect ethical leadership behaviors can have on organizational performance. It is in times like the present that people turn to their leaders to inspire them to reach for higher goals, and aspiring to higher goals, in turn, improves organizational performance.

A number of weeks ago we were privileged to participate in a meeting where Wells Fargo Bank Chairman Dick Kovacevich presented his perspectives on banking and the current economic climate. Also in attendance were Northern California executives representing AT&T, Robert Half International, Chevron and OOCL, one of the world's largest shipping and logistics companies.

Kovacevich's view was that the financial crisis we are experiencing never should have happened — but for the unethical behavior and practices within the financial sector itself. Amidst a lack of regulation, rules and restraints and without regard to timeless principles of how to serve customers, provide quality products and run sustainable businesses, the financial institutions brought their houses down themselves.

In the April/May issue of Merit Guidelines™ we talked about the topic of ethics and the importance of ethical behaviors being demonstrated from the top of any organization. We also commented on the importance of including ethics in leadership development training and rewarding ethical behavior to perpetuate it and demonstrate the importance placed on it in the way you run your company.

When companies are run by ethical leaders ethics become a part of the organization's culture. The Wells Chairman expressed it simply. "Doing the right thing is the right thing to do." And his CEO adds, when you operate like that, it doesn't take any exotic or complicated formula to be successful.

So what is this elixir called ethical leadership that seems to have evaded many organizations of late? It could be thought of as involving five critical elements including quality, communications, collaboration, succession planning and awareness of personal effectiveness in terms of contribution to the organization. These are all relatively simple concepts and certainly not new to HR professionals who have known their importance to organizational success for years. And when you survey business executives as to the significance of these issues in satisfying customers and outperforming the competition, they are undeniably critical if you are intending to stay in business.

So if we have the key elements of ethical leadership correctly identified and we have known about their importance to successfully running quality organizations that "do the right things right" — it must be failed execution or the lack of awareness of the consequences of not leading this way that have brought us to where we are.

Talk about HR wanting or needing to be more strategic — focusing on the single agenda of ensuring these five processes are the foundation for leading and achieving business goals would be a significant strategic contribution to many companies.

Let's look more closely at what we are talking about.

Quality — aside from implementing the full details of a TQM or Six Sigma program, by utilizing the "plan, do, check, improve" process in all of your efforts, better outcomes will result. It is important to remember however that your definition of quality and service must be the same as your customer's — external or internal — and to be certain of that you have to ask them. The total company experience your customer comes away with from doing business with you is everyone's responsibility in your business. Leaders, who embrace this, demonstrate it, expect it, communicate the importance of behaving in this manner, and reward those who do are on their way to demonstrating ethical leadership.

But obviously there is much more.

Communications — the basis of everything any of us does. To borrow the term we just discussed, it is quality communications that is important in this context, as it represents the life-blood of desired outcomes. Accurate, planned, clear, tailored and open (which means designed to be two-way) are characteristics of quality communications. Messages constructed for specific audiences and in all cases tested afterwards to ensure the intended points were accurately received and understood, should be the expected norm. As situations and influencing conditions change, messages must change to keep the end-goal everyone is striving for in perspective, and so communications must be ongoing. In doing so you build trust and confidence throughout your organization.

In tough times simple communications, and even more so two-way communications, are often abandoned. When that happens people lose faith and focus and leadership suffers. There is no "figuring it out and fixing it by yourself" in times like these. We all need to know how we fit in and what we can do to contribute. Even bad news effectively and sincerely presented with well thought out options considered can be rationalized, and ethical leadership is reinforced.

Collaboration — gaining a greater result; encouraging inter-activity; inspiring others to follow and contribute based on a mutually held belief or vision, are powerful actions and hallmarks of ethical leadership. The willingness to enlist different perspectives to get the richest abundance of ideas from which to formulate plans and make decisions leads to greater success. In a broader sense, recognizing that business success stands on the interests of many stakeholders — internal and external — ethical leaders never lose sight of the importance of these critical interests and relationships in the long term. Individuals in leadership positions that focus on their own near-term gain are not leading their organizations — they more accurately are using them.

Sustainability Through Others — call it succession-planning, development or mentoring, the purpose is to identify, engage and prepare others to contribute and eventually lead. The process of collaboration mentioned above facilitates this in organizations led by ethical, aware leaders who place value on bringing others along as an important way of preparing for the future and sustaining their own good work.

The struggle here for many leaders as they develop this style is giving up some of the limelight, turf or recognition as being in charge. In this regard, as in many other facets in life, more power is gained when you share it, and when that happens trust and respect for the leader grows within the organization.

Possibly the hardest ethical element to understand and accept as a leader is the answer to the question — "How long should you stay?" When have you reached your level of maximum contribution?

Pushing ego aside, ethical leaders are aware of when they no longer serve the best interests of an organization or group and it is time to step aside. Usually this stage manifests itself in subtle ways that may feel like the need for more challenge or change of scenery, waning interest, distraction or stronger desires to contribute in other areas. Regardless, ethical leaders are sensitive to these signs and are proactive with what they do next. (Stepping aside doesn't have to mean leaving an organization since ethical leaders should be found at all levels within them.)

Having spent time developing others, sharing responsibility and success, building collaborative networks during the course of leading, being proactive communicators and stewards of quality and doing the right things right, ethical leaders have a stronger sense of their own success that is not predicated on position or title. It is these same qualities that allow them to be so effective with the individuals, groups and organizations they lead, and it is the source of the trust and inspiration those who work for them are able to develop. It is only understandable that this translates to better business performance,

In the wake of questions about ethical behavior on Wall Street, Duke University's Center on Leadership and Ethics held its regularly scheduled Leadership and Ethics Conference late last Fall.

In the course of bringing together executives to talk about the need for strong ethical leadership in business and government, they reinforced some rather widely held beliefs that — "leaders who display ethical leadership behaviors-that is, those who place the long-term interests of a group ahead of their personal goals-are more likely to ensure the long-term survival and success of the organization. Displaying such stewardship involves considering the trade-offs between short- and long-term objectives. Leaders who are able to do so take personal accountability for their influence on stakeholders within and outside the organization."

Although missing broadly in recent years it is not too late to be reminded of the importance of these behaviors at every level. In difficult times, it is even more important to understand the positive effect ethical leadership behaviors can have on organizational performance. It is in times like the present that people turn to their leaders to inspire them to reach for higher goals, and aspiring to higher goals, in turn, improves organizational performance.

Employees also look to leaders to model ethical behaviors that promote the long-term welfare of the organization. Focusing leadership development activities on behaviors that promote higher aspirations among employees and that emphasize accepting responsibility for the whole organization, its mission and constituencies are specific actions that organizations can take with regard to leader development that can improve performance even in this economy.