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ethical leadership, decision-making, and organisationsethical decision-making and leadership are the basis of ethical organisations, corporate social responsibility, 'fairtrade', sustainability, the 'triple bottom line', and other similar concepts
"Ethical - Relating to moral principles or the branch of knowledge dealing with these..." Interestingly the definition continues by way of example: "...Morally correct: Can a profitable business ever be ethical?..." N.B. This is merely an example of the word in use - it's not an opinion - nevertheless it's an example which reflects modern attitudes and the context in which ethical questions now arise which would not readily have done so a generation or two ago. Morals and morality appear commonly in attempts to define what ethical means, although given the difficulties of defining the word morality without using quite subjective terms, this is not terribly helpful. Morality incidentally is defined in the OED as '...principles concerning the distinction between right and wrong or good and bad behaviour..." See what I mean?.. Not especially firm or scientific. More helpfully the OED adds some extra explanation about ethics, summarised thus: Western ethical philosophy can be divided roughly into three types:
Moreover to show how ideas change over time, the 1933 Oxford English Dictionary says first of ethics (when seemingly the word 'ethic' was used as an adjective like today's use of the word ethical):
"The prevalent tone of sentiment of a people or community..." Extending this theme, in a practical sense, aside from what is covered by law or other clear standards, whether something is considered to be ethical by people (markets, customers, media, etc) is generally a matter of opinion. The same might be said of morality. Both concepts - ethics and morality - are subjective and a reflection of society and civilization, which of course implies that precise meanings will change. Both are relative in time and situation. Certain ethical issues are represented in law, and in this respect are firm, to a point. (See the notes about ethics and law below.) Ethics which are not covered clearly by law are usually a matter of subjective judgement, especially, but not exclusively, by the reasonable majority, whose view is significant in deciding whether something is ethical or not. Such a vague way of judging whether something is ethical is not to diminish the importance of ethical factors. On the contrary. In work and life, opinion - especially large scale opinion - can be more influential than rules and law, notably in relation to markets, publicity, and people's attitudes, which manifest especially in the behaviour of customers and employees. The law can actually have a theoretical or marginal effect, whereas large scale opinion is an unavoidable powerful reality. For example it is unlawful to drive a little faster than the speed limit. But the vast majority of people consider it to be acceptable, and so do it. The UK poll tax of the 1980s was lawful, yet public reaction (much of it unlawful) against it caused the law to be changed. Ultimately people's attitudes are more powerful than law. Law is a reflection of public tolerance and views, not a cause of them (unless to produce a reaction against the law of course). So do not for a moment underestimate the importance of ethical considerations on the basis that they could be subjectively judged and difficult to define in law. Popular public opinion is the sternest most unforgiving measurement of all. ethical business and ethical investmentAs previously stated, the purpose of this article is not to define or describe ethical business in an absolute sense.The explanation thus far should demonstrate why such a pronouncement is impossible. Ethical business - as other ethical issues - are a matter of individual and collective judgement. It is possible to go so far only in outlining ethical considerations, and to give some modern examples of interpretation which seem generally to be accepted. Ethical investment is a useful aspect for considering ethical business, since large scale investment is ultimately subject to market forces, which largely reflect public opinion. As such ethical investment criteria and examples tend to be a good guide towards ethical attitudes of large sections of people and society, rather than the 'expert' views of leaders and gurus. Ethical investment has been a growing aspect of business investment since the 1970s, although arguably the first types of ethical businesses can be traced back to the Quaker and Methodist movements of the 1800s. Then as now ethical business and investments regard socially responsible activities and aims with far greater priority and emphasis than the traditional profit and free market business approach. Traditional profit-based business models, which arose and came to dominate global commerce from the beginnings of industrialisation, inherently do not require a socially responsible element, other than compliance with the law, and a reflection of public reaction for pragmatic marketing (and ultimately profit) purposes. Ethical business or investment is concerned with how profit is made and how much profit is made, whereas traditional profit-centred free-market based business is essentially only concerned with how much profit is made. Traditional profit-centred business seeks to maximise profit and return on investment with no particular regard for how the profits are made and what the social effects of the business activities are. The ethical approach to business and investment seeks to maximise profit and return on investment while minimising and avoiding where possible negative social effects. In this context 'social' and 'socially responsible' include related factors such as:
As stated, this is not a pronouncement of what's unethical. It's a reflection of current attitudes, which you can use in your own way alongside the other information on this page to develop your own ideas as to what's ethical and what's not. Also as stated, things change with time and situation. For example if technology is developed enabling nuclear power to be safer and less impactful on the future then obviously concerns in this area would reduce and the ethical implications would decrease or disappear. Standards of what is considered ethical change over time, and generally these standards become more humane as humankind develops greater tolerance, awareness, and capacity for forgiveness and compassion. Humankind's - or any society's - capacity for ethical behaviour increases with its own safety and confidence of survival and procreation. Hence the human tendency to become less ethically flexible when under threat. Thus ethical behaviour is a relative judgement, as well as a subjective one. We cannot impose one society's moral code onto another society with different needs and demands. Interestingly what is considered unethical in present times, commonly becomes unlawful in the future. The leading ethical thinking of any time tends to pioneer social and civilization change. And so here lies substantial advantage for corporations and other groups and bodies which anticipate such changes. They adapt quicker, and are seen generally to lead rather than follow. They also manage change more successfully, since they have time to do it. Organisations and institutions which fall behind public ethical expectations find catching up a lot more difficult. ethics and lawMany believe that the word ethical equates to lawful, and that by being lawful an organisation or activity is automatically ethical.This is not so. While many things that are unethical are also unlawful, ethics do not equate to law. Many unethical things are entirely lawful (although some can only be tested when/if they get to court). Moreover sometimes the law (of any land) can produce extremely unethical effects. In fact while most unlawful actions will also tend to be unethical, certain situations can contain a strong ethical justification for breaking the law, or changing the law. Notable examples are situations in which the law, or the way law is applied, is considered unethical ('wrong' is the typical description) by sufficient numbers of people to pressure the legal system to change. You can perhaps think of examples when this has happened, and such cases are examples of an ethical viewpoint being ultimately more powerful than the law. Examples of this happening through (Western) history illustrate the tendency for ethical considerations to drive the law: women's suffrage (women's right to vote); the abolition of slavery; and modern human rights and equality legislation are examples of ethical pressures causing change in law. The independence of nations and the break-up of colonial rule are further examples of ethical pressures overwhelming the force of law. Unlawful acts are not always unethical. Ethical acts are not always lawful. Lawful therefore does not equate to ethical, and unethical does not equate to unlawful. Interestingly, the UK Consumer Protection Regulations effective on 26 May 2008 are a good example of unethical business practices becoming prohibited in law. For example it has always been unethical to mislead customers into buying products or services. Now it is illegal to do so (in respect of consumers - here are the implications of the regulations). ethics and religionFor many people, ethics and ethical judgements are based on a religious belief.However religion is not a basis for arriving at consistent standards of ethics, any more than the law is. To illustrate the point: A particularly dangerous implication arising from mixing decision-making with religion is the one which provides the decision-maker with a sort of safety net if everything goes wrong. "God will be my judge..." For people who are not religious, or who have a different religious faith to decision-maker, these words are a little disturbing in the context of ethical decision-making. Whose god? Your god? My god? Their god? All gods? The good gods? The collective gods committee? And when? When will (the whatever chosen) god be judging this decision? While the decision is being made? Before the decision is implemented? Immediately after the decision's implementation (when on Earth some serious monitoring, checking and managing needs to be happening)? Far into the future when the decision-maker has expired and gone to whatever version of heaven his (it's generally a man) particular faith promises him? The inference is the latter of course. A bit bloody late in other words. And by what criteria will (the whatever chosen) god be judging the decision? To whose and with precisely what standards are we being asked to agree here? And what will be the results of (whatever chosen) god's decision, especially if it's a mighty god-like thumbs down? What are (the whatever chosen) god's contingencies for putting it all straight again? It's anyone's guess.. Do you see how religion is not a brilliant aid for decision-making. Religion is a personal matter. It has no place in decision-making affecting other people. Worse, using religion as a personal safety net for serious decision-making is a reckless desertion of leadership responsibility. Right-minded people want leaders to take ultimate full absolute responsibility for decisions. They do not want a leader to seek refuge or personal salvation in (whatever chosen) god or heaven or a confession box. This is an additional reason for not mixing religion with leadership and ethical decision-making: too many people simply do not accept the basic premise that a leader can delegate responsibility in such a very strange and unaccountable way. Aside from anything else, if religion were useful in leadership and decision-making then all human organisations would be run by the clergy. Civilization tried that a few thousand years ago and it doesn't work. Please note: If you are religious and believe that religion has a place in leadership and decision-making then you might disagree with this section. If so please understand that I am not berating religion or religious people. I accept that through humankind's existence - especially in the last few hundred years - religion in various forms has often provided an essential code (of ethics arguably) for civilizations and societies to live positively, harmoniously, generously, peacefully, lovingly, etc. I am making a different point, namely: reference to religion, and especially a strong personal faith, is not generally very helpful towards achieving great objectivity, which is vital for ethical decision-making. Moreover religion of certain types can be extremely divisive, which is obviously not useful for decision-making entailing diverse groups of people, as commonly arises in today's increasingly diverse world. examples of unethical behaviours, activities, policies, etcInstead of trying to arrive at a standard or all-encompassing rule of what is ethical, it is helpful to illustrate the depth and variety of ethics through suitable examples.This is an extension of the ethical business investment items listed above, and goes into far greater detail of different behaviours which might often be regarded as unethical. The first category might seem obvious and clear-cut, and actually it's a reasonable starting point for the vast majority of ethical decisions, but this one point cannot be applied exclusively in assessing whether something is ethical or not:
Most of the above are subject to extent or degree, whereby serious extensive examples are more likely to be unethical than minor transgressions and negligible effects. ethics and public opinionEthical considerations are not wholly determined by majority view, just as they are not wholly defined by law or religion.Ethics are not a matter of a referendum or vote. Popular opinion alone is an unreliable measurement of what is ethical for several reasons:
'for the greater good' ethical considerationsA significant influence on ethical judgement is the 'flip-side' of whatever situation is under question: the effects of the 'ethical' decision.Upholding an ethical principle might not be sensible if the effect of doing so causes a wider or greater disadvantage. This sort of justification when used for unethical actions and policies, etc., is often referred to as being 'for the greater good'. Such a viewpoint is associated with a 'utilitarianism' approach to ethics. Looking at the flip-side and assessing the 'greater good' implications can be helpful, ideally leading to the facilitation of a compromise solution. Considering the flip-side (or sides) is actually necessary for relatively straight-forward uncontroversial decisions and actions, especially when opinions on all sides can be aired, debated, and understood. However the 'greater good' approach can be a risky angle if used subjectively and proactively, not least because it tempts the decision-maker to play god, and to attempt a god-like appreciation of a wide and complex situation, instead of adopting a less personal and more detached approach. The combination of the following factors in ethical decision-making is rarely effective:
Remember a significant inescapable part of ethical actions are the views and needs of the rational majority, of the people affected by the action or decision. If you don't know reliably what these (views and needs) are then you don't understand the flip-side enough to justify anything, let alone a risky borderline decision. Beware of this 'greater good' dimension also when you see it used by others, because the defence of an unethical decision as being "...for the greater good..." is often used cynically and dishonestly. The 'greater good' can be a big trap - especially for anyone prone to subjective high-minded thinking. The 'greater good' angle also illustrates the dilemma aspect within many ethical decisions. Ethics are not clear-cut, especially on a large scale. Ethical leadership in the face of big ethical decisions is characterised by wisdom and objectivity, not by subjective personal belief, worse still when it protected by control mechanisms and the recklessness which often accompanies emotional insecurity, or a strong personal 'faith' or power delusion. Beware the leader for whom the personal victory of the decision appears to be more important than the decision's outcome, whatever the scale and situation - and recognise these tendencies in yourself if they arise. Objectivity is the key to ethics, not personal belief or religion or personal power. Leaders who make decisions subjectively and personally for reasons of building power, reputation and wealth, entirely miss the point about ethics, and their fundamental philosophy (or lack of) effectively prevents any real ethical objectivity. If the motive is wrong, then everything else will be too. ethical objectivitySo, law alone is not a basis for ethical decision-making. Nor is religion. Nor is 'the greater good'. And even the rational views and needs of the affected majority are not a basis alone for ethical decision-making.So what is the basis of ethical decision-making? My best suggestion is: Objectivity and fairness are the basis of ethical decision-making. In simple terms this means you must be able to see the other people's points of view. This might seem a simple statement of the bleeding obvious, and it might be, but it is not often practised. True objectivity is quite difficult to achieve, especially for leaders under pressure. Similarly, fairness is difficult to define, let alone apply. Detachment is a huge part of the process. Objectivity is impossible without personal detachment. Fairness cannot begin to be achieved without detachment, since it's about other people, not the leader, nor the leader's supporters and environment. Being ethical is not a matter of evangelizing or imposing your standards and views on other people. (See Transactional Analysis to understand why people behave in this overly paternalistic way.) Being ethical is being fair. Being fair means understanding implications from other people's perspectives - not your own. The more widely and well you appreciate other people's issues and implications, then the easier you will find it to be ethical. Cybernetics is a really useful way to look at objectivity. Objectivity entails understanding how systems work and inter-relate. But systems here means merely the general sense of people and the way life is organised. Systems does not refer to complex mathematics or scientific formulae. Again, it requires you to step back - to detach yourself, resist personal bias and emotion - step back, be objective, adult, mature - fair. Objectivity is a wonderfully potent and extremely flexible ability to pursue. Especially if you can combine it with the ability to facilitate rather than influence. Objectivity is flexible because it can be approached and achieved in so many different ways - intuitively, logically, systematically, creatively - anyone can do it. In the same way that the truth - purity, probity - is available to anyone who cares to look for it. What does ethical objectivity entail? Here are some suggestions of the main angles. The list is not exhaustive - you will see other significant perspectives for different situations. For small local decisions most of the list might not apply. But if your decision has potentially significant effects, consider these different perspectives in striving for as much objectivity as you can. Ethical considerations comprise several variables in one combination or another, if you are striving for real objectivity:
some principles for ethical decision-making
different personalities see ethical organisations in different waysDifferent people relate to ideas about how to run organisations in different ways.Not everyone readily relates strongly to the principles of corporate integrity, sustainability, the 'Triple Bottom Line', etc. These are essentially idealistic views and as such will mostly appeal to idealistic people. If you are an idealist, remember that not everyone is idealistic. For example, many entrepreneurial personalities are actually more likely to prefer and utilise logical and critical thinking, and relatively dispassionate decision-making, than idealistic principles. These qualities enable entrepreneurs to do what they do well, and most organisations need a good sprinkling of these types of people. These personalities need hard and fast reasons why the triple bottom line and ethics and CSR are important to achieving solid performance outcomes. Process-oriented people; routine-centred, reliable, dependable types, will also not automatically buy in to idealistic principles, because these people are strongly focused on facts and real data, rather than ideas and feelings. These people will often need systemic evidence and predictable processes to assimilate and support idealistic concepts and philosophies. People won't simply buy in to the ethical zeitgeist because they are told to. Therefore when explaining the importance and aims of corporate ethics, consider the audience. People have different strengths and styles, and some need their own reasons for buying in to idealistic aims, outside of idealism itself. Idealists and humanitarians usually have difficulty accepting that processes and financials should be the primary drivers of organisations. By the same token, people who are driven and motivated by concrete thinking and performance outcomes will not naturally accept that organisations should place significant emphasis on idealistic humanitarian philosophies and aims. Aside from explanation and understanding, we must also be careful to manage the mix of organisational obligations. Without efficiency, competitiveness and profit, there'll be no organisation to look after the people and planet. It's a question of balance. As ever we need different people's strengths to be able to achieve this. (And while this is an over-simplification), some people are better taking care of the profit, some the people, and some the planet - but everyone needs to be aware of all three, and the fact that the future great organisations will be the ones whose people can best manage the mix. See the triple bottom line exercise for ideas about getting the ball rolling, if you've not already done so. See also the globalisation debate exercise, designed to help highlight issues and actions. organisational outcomes and benefits from ethical leadershipMore and more leaders of businesses and other organisations are now waking up to the reality of social responsibility and organisational ethics.Public opinion, unleashed by the internet particularly, is re-shaping expectations and standards. Organisational behaviour - good and bad - is more transparent than ever - globally. Injustice anywhere in the world is becoming more and more visible, and less and less acceptable. Reaction to corporate recklessness, exploitation, dishonesty and negligence it is becoming more and more organised and potent. Employers, businesses and organisations of all sorts - especially the big high profile ones - are now recognising that there are solid effects and outcomes driving organisational change. There are now real incentives for doing the right thing, and real disincentives for doing the wrong things. As never before, there are huge organisational advantages from behaving ethically, with humanity, compassion, and with proper consideration for the world beyond the boardroom and the shareholders: competitive advantage - customers are increasingly favouring providers and suppliers who demonstrate responsibility and ethical practices. Failure to do so means lost market share, and shrinking popularity, which reduces revenues, profits, or whatever other results the organisation seeks to achieve. better staff attraction and retention - the best staff want to work for truly responsible and ethical employers. Failing to be a good employer means good staff leave, and reduces the likelihood of attracting good new-starters. This pushes up costs and undermines performance and efficiency. Aside from this, good organisations simply can't function without good people. investment - few and fewer investors want to invest in organisations which lack integrity and responsibility, because they don't want the association, and because they know that for all the other reasons here, performance will eventually decline, and who wants to invest in a lost cause? morale and culture - staff who work in a high-integrity, socially responsible, globally considerate organisation are far less prone to stress, attrition and dissatisfaction. Therefore they are happier and more productive. Happy productive people are a common feature in highly successful organisations. Stressed unhappy staff are less productive, take more time off, need more managing, and also take no interest in sorting out the organisation's failings when the whole thing implodes. reputation - it takes years, decades, to build organisational reputation - but only one scandal to destroy it. Ethical responsible organisations are far less prone to scandals and disasters. And if one does occur, an ethical responsible organisation will automatically know how to deal with it quickly and openly and honestly. People tend to forgive organisations who are genuinely trying to do the right thing. People do not forgive, and are actually deeply insulted by, organisations who fail and then fail again by not addressing the problem and the root cause. Arrogant leaders share this weird delusion that no-one can see what they're up to. Years ago maybe they could hide, but now there's absolutely no hiding place. legal and regulatory reasons - soon there'll be no choice anyway - all organisations will have to comply with proper ethical and socially responsible standards. And these standards and compliance mechanisms will be global. Welcome to the age of transparency and accountability. So it makes sense to change before you are forced to. legacy - even the most deluded leaders will admit in the cold light of day that they'd prefer to be remembered for doing something good, rather than making a pile of money or building a great big empire. It's human nature to be good. Humankind would not have survived were this not so. The greedy and the deluded have traditionally been able to persist with unethical irresponsible behaviour because there's been nothing much stopping them, or reminding them that maybe there is another way. But no longer. Part of the re-shaping of attitudes and expectations is that making a pile of money, and building a great big empire, are becoming stigmatised. What's so great about leaving behind a pile of money or a great big empire if it's been at the cost of others' well-being, or the health of the planet? The ethics and responsibility zeitgeist is fundamentally changing the view of what a lifetime legacy should be and can be. And this will change the deeper aspirations of leaders, present and future, who can now see more clearly what a real legacy is. other ethical decision-making ideasThe UK Institute of Business Ethics suggests a simple 'test' for ethical decision-making in business (see their website for their version).Adapted below it is applicable to all decisions in all types of organisations and in life as a whole. It's a remarkably easy test to apply. Try it next time you have to make a decision:
If you have any doubt about saying Yes to any of the questions then you should think about things more carefully. Maybe there is an entirely different and better solution - there often is. If you can't decide how to answer these questions, seek input from someone who has strong ethical principles, and who owes you nothing. Especially do not ask anyone to advise you about difficult decisions if they owe you some sort of allegiance. Leaders can sometimes be blinded by their own feelings of self-importance, and more dangerously can believe that the leader's job requires them to shoulder the burden of decisions which cause anguish and suffering, or worse. Believing that leadership carries some sort of right to take risks with other people's well-being is nothing more than arrogant delusion. A strong feature of good leadership is knowing when, and having the strength, to find another way - the ethical way. stakeholders and ethical organisationsIf we consider fully what a modern ethical organisation is, we must inevitably take a far wider view in defining modern stakeholders.A modern definition of 'stakeholder' is broader than the conventional ideas about shareholders, investors and partners, etc. A modern definition of a stakeholder is any group which has an interest in, involvement with, dependence on, contribution to, or is affected by, the organisation. Individuals are stakeholders too of course, but for practical reasons most organisations will necessarily view stakeholders as groups, and for the purposes of this explanation the term 'stakeholder' here also means a stakeholder group. A stakeholder is any group of people who could lose or gain something because of the actions of the organisation. This is especially relevant in the context of ethics, corporate responsibility, sustainability, etc. In fact every person on this earth is arguably a stakeholder in every organisation on this earth. It's not acceptable to dismiss or deny a group as a stakeholder on the basis that the relationship is too difficult to measure. If the group is affected by the organisation then it's a stakeholder and the group's needs must be considered. Thus the organisation acknowledges its full responsibilities. The question is then one of type and degree - in other words the needs of each stakeholder, and the extent of the effect of the organisation on each stakeholder. So a good modern stakeholder model or analysis would be one which recognises all of the stakeholder and then identifies a relationship (needs and interests, etc), and also shows a degree of impact for each stakeholder. Such an analysis can be helpful in training and development, and is arguably also essential in strategic planning and decision-making. Some impacts might seem small, but if the size of the stakeholder group is very large then the overall impact might be considerable. By accepting that stakeholders are represented by a far wider range of people and groups than conventionally applied, we effectively expand and liberate the appreciation of what organisational (and leadership and management) responsibility really is, and how far it extends. For example, a villager in deepest Africa is a stakeholder in all UK organisations given their (our) effect on the world's natural shared resources and the natural world as a whole. Children yet to be born on the other side of the world are stakeholders of any organisation given that its activities use, deplete, spoil, (or preferably instead) protect, enhance, and improve the resources and quality of life available to future generations. Failure to recognise these more distant and less obvious groupings as 'stakeholders' is what has enabled organisations to ignore their wider responsibilities both to local communities and to the rest of the world beyond. Stakeholders can be found in any or all of the following groups depending on the type of organisation. Below are examples of stakeholder groups, including conventional 'investor' stakeholders, and more modern stakeholder ideas. Remember, a stakeholder is any group that is affected in one way or another by the activities of an organisation.
Given that this sort of modern stakeholder perspective produces such a wide-ranging and extensive list of stakeholder groups, it's essential to apply (for any given situation) some method of evaluating and expressing relative stakeholder interests and needs, and also to measure and show the varying significance of the stakeholder relationships; the degree of impact or dependence. Logically, this can be achieved via some sort of 'weighted analysis', designed to assess, analyse, compile and prioritise all stakeholder needs for any given organisation and operating scenario. This is not a precise science, but again, the difficulty in measuring the impact is no excuse for denying the existence of the relationship, the stakeholding, and the organisational responsibility for the stakeholder group concerned. Below is a suggested basic template for this purpose, which you can adapt for your own situation. stakeholder analysis template
Each of the example categories above might need to be broken down into sub-sections or shown as more precise descriptions which relate to the organisation concerned. Using a stakeholder analysis like this helps to identify an organisation's full responsibilities, not just the obvious conventional investor requirements to produce a profit and return on investment. In the modern world an organisation's obligations extend far beyond these traditional financial aims. If you are in doubt as to stakeholder expectations and needs, ask them what they are. Fundamentally this is all about understanding and respecting the needs of others, and as far as possible incorporating them into the philosophy, the aims, the processes, and the activities of the organisation. ethical leadership and management modelBelow is a modern model for management and leadership in the 21st century. It's an interpretation of the 'personality' of good ethical modern management and leadership. As such it's not a process or technique - it's an attempt to characterise good modern ethical management and leadership.
ethics informationFairtrade (not to be confused with other organisations using the same name - be wary)Institute of Business Ethics (UK) Institute of Business Ethics (US) Triple Bottom Line (Wikipedia) Sustainability (Wikipedia) Sharon Stoerger's Business Ethics Resources and Links (US-based ethics resources listing) Corporate Responsibility Coalition (CORE) SustainAbility Consultancy (Founder John Elkington is generally regarded as having first coined the 'Triple Bottom Line' term.) |
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