Ethical Business Leadership

Lead by Conducts eventually the Good conducts.

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Term Project

Ethical Business Leadership


Submitted To:

Course Instructor: Dr. Abdul Wahab Suri
Contact Info: [email protected]
Course Title: Business Policies & Ethics
Course Code: 94047

Submitted By:

Name of Student: Muhammad Asif Khan
Student ID: MB-2-05-51271
Semester: Fall 2016
Campus: PAF-Karachi Institute of
Economics & Technology (KIET) –
City Campus

Submission Date: November 24, 2016

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What Is Ethical Leadership?

One typical response to the “ethics crisis” in business is an “ethical leadership,” yet there are few
explanations of what exactly is meant by the term. Many executives and business thinkers believe
that ethical leadership is simply a matter of leaders having good character. By having “the right
values” or being a person of “strong character,” the ethical leader can set the example for others
and withstand any temptations that may occur along the way.

Without denying the importance of good character and the right values, the reality of ethical
leadership is far more complex and the stakes are much higher. Over the past 25 years, in talking
to executives in a number of industries about the problems of how to lead in a world of great
change—globalization, democratization, and incredible technological advances— researchers have
identified a number of touchstones for the idea of “ethical leadership.”

Their experience is often contrary to the picture of business executives one finds in public
discussion where they are often seen as greedy, competitive, and only concerned with
compensation. In fact most executives want to be effective in their jobs and to leave their
companies and the world a better place, creating value on both fronts for those whose lives they
affect.

Leaders see their constituents as not just followers,
but rather as stakeholders
striving to achieve that same common purpose...


My view of ethical leadership takes into account not only the leader but also his constituents
(followers and key stakeholders), the context or situation that the leader and constituents face, the
leader’s processes and skills, and the outcomes that result.

Leaders are first and foremost members of their own organizations and stakeholder groups. As
such, their purpose, vision, and values are for the benefit of the entire organization and its key
stakeholders. Leaders see their constituents as not just followers, but rather as stakeholders striving
to achieve that same common purpose, vision, and values. These follower and stakeholder
constituents have their own individuality and autonomy which must be respected to maintain a
moral community.

Ethical leaders embody the purpose, vision, and values of the organization and of the constituents,
within an understanding of ethical ideals. They connect the goals of the organization with that of
the internal employees and external stakeholders. Leaders work to create an open, two way
conversations, thereby maintaining a generous understanding of different views, values, and
constituents’ opinions. They are open to others’ opinions and ideas because they know those ideas
make the organization they are leading better.

Characteristics of Ethical Leaders

In today’s turbulent world, ethics and values are present at a number of levels for executives and
managers—leaders who devote their time and energy to leading the process of value creation. This
broader concept of ethical leadership empowers leaders to incorporate and be explicit about their
own values and ethics. The following list provides a framework for developing ethical leadership.
It is based on the observations of and conversations with a host of executives and students over the
past 25 years, and on readings of both popular and scholarly business literature. Written from the
perspective of the leader, these ten facets of ethical leaders offer a way to understand ethical
leadership that is more complex and more useful than just a matter of “good character and values.”

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Ethical Leaders:

1. Articulate and embody the purpose and values of the organization.

It is important for leaders to tell a compelling and morally rich story, but ethical leaders must also
embody and live the story. This is a difficult task in today’s business environment where everyone
lives in a fishbowl—on public display. So many political leaders fail to embody the high-minded
stories they tell at election time, and more recently, business leaders have become the focus of
similar criticism through the revelations of numerous scandals and bad behaviors.

CEOs in today’s corporations are really ethical role models for all of society. Following a series of
unethical activities by Citigroup employees in Japan in 2004, new CEO Chuck Prince fired several
executives, publicly accepted responsibility and bowed apologetically to Japanese officials. Not
only did Prince’s message resonate within Japan, but it also signaled a new era of “shared
responsibility” within the culture of Citigroup where every employee was expected to take
ownership for their decisions that affected the enterprise.

It is important for leaders to tell a compelling and morally rich story,
but ethical leaders must also embody and live the story.

2. Focus on organizational success rather than on personal ego

Ethical leaders understand their place within the larger network of constituents and stakeholders. It
is not about the leader as an individual, it is about something bigger—the goals and dreams of the
organization. Ethical leaders also recognize that value is in the success of people in the
organization.

In 1998, in a bold gesture demon-starting how he valued the company’s line employees, Roger
Enrico, former Chairman and CEO of PepsiCo, chose to forego all but $1 of his salary, requesting
that PepsiCo, in turn, contribute $1 million to a scholarship fund for employees’ children.

In a similar manner, the founders of JetBlue began a process of matching, from their salaries,
employee donations to a charity. Today, their entire salaries go to the JetBlue Crewmember
Catastrophic Plan charity, to assist staff with crises not covered by insurance.

The point of these examples is not that ethical leaders donate their salaries to charities, but rather
that ethical leaders identify and act on levers, such as employee loyalty, that drive organizational
success.

3. Find the best people and develop them.

This task is fairly standard in different models of leadership. Ethical leaders pay special attention
to finding and developing the best people precisely because they see it as a moral imperative—
helping them to lead better lives that create more value for themselves and for others. Finding the
best people involves taking ethics and character into account in the selection process.

Many CEOs have said to us that judging someone’s integrity is far more important than evaluating
their experience and skills. Yet, in many organizations, employees are hired to fill a particular skill
need with little regard to issues of integrity.

Ethical leaders pay special attention to finding and developing the best people

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4. Create a living conversation about ethics, values and the creation of value for
stakeholders.

Too often business executives think that having a laminated “values card” in their wallet or having
a purely compliance approach to ethics has solved the “ethics problem.” Suffice it to say that
Enron and other troubled companies had these systems in place. What they didn’t have was a
conversation across all levels of the business where the basics of value creation, stakeholder
principles and societal expectations were routinely discussed and debated. There is a fallacy that
values and ethics are the “soft, squishy” part of management. Nothing could be further from the
truth.

In organizations that have a live conversation about ethics and values, people hold each other
responsible and accountable about whether they are really living the values. And, they expect the
leaders of the organization to do the same. Bringing such a conversation to life means that people
must have knowledge of alternatives, must choose every day to stay with the organization and its
purpose because it is important and inspires them. Making a strong commitment to bringing this
conversation to life is essential to do if one is to lead ethically.

Most people know the story of Johnson and Johnson’s former CEO Jim Burke and the Tylenol
product recall in the 1980s in which, at a great short-term financial cost, he pulled all potentially
tampered-with products off the shelves, thereby keeping the public’s trust intact.

The less well-known background to this story, however, is critical to understanding the final
outcome. Well before the Tylenol crisis hit, Johnson & Johnson had held a series of “challenge
meetings” all around the world, where managers sat and debated their “Credo,” a statement of their
purpose and principles of who they wanted to be as a company. The conversation about ethics at
Johnson & Johnson was alive, and in many ways made Jim Burke’s choice about handling the
situation clearer than it otherwise would have been.


5. Create mechanisms of dissent.

Many executives don’t realize how powerful they are simply by virtue of their positions.
Psychologists such as Stanley Milgram have long ago demonstrated that most of the time people
will obey what they perceive to be legitimate authority, even if there is no cost for disobedience.
To avoid this “Authority Trap” it is critical to have an established and explicit way for employees
to “push back” if someone thinks that a particular market, region, or internal process is out of line.

This needs to be made part of the organizational culture, not just a line item in a compliance
program document. Some companies have used anonymous e-mail and telephone processes to give
employees a way around the levels of management that inevitably spring up as barriers in large
organizations. Many executives also have used “skip level” meetings where they go down multiple
levels in the organization to get a more realistic view of what is actually going on.

General Electric’s famous “workout” process—where workers meet to decide how to fix problems
and make the company better—was a way for front line employees to push back against the
established policies and authority of management. All of these processes lead to better decisions,
more engaged employees, and an increased likelihood of avoiding damaging mistakes.

In a company that takes its purpose or values seriously, there must be mechanisms of pushing back
to avoid the values becoming stale and dead. Indeed, many of the current corporate scandals could
have been prevented if only there were more creative ways for people to express their

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dissatisfaction with the actions of some of their leaders and others in the companies. The process
of developing these mechanisms of dissent will vary by company, by leadership style, and by
culture, but it is a crucial leadership task for value creation in today’s business world.
...there must be mechanisms of pushing back
to avoid the values becoming stale and dead


6. Take a charitable understanding of others’ values.

Ethical leaders can understand why different people make different choices, but still have a strong
grasp on what they would do and why.

Following twenty-seven years in South African prisons, Nelson Mandela was still able to see the
good in his jailers. After one particularly vicious jailer was being transferred away from Robbins
Island because of Mandela’s protest and push back, the jailer turned to Mandela and stated “I just
want to wish you people good luck. ”Mandela interpreted this statement charitably as a sign that all
people had some good within them, even those caught up in an evil system. Mandela felt that it
was his responsibility to see this good in people and to try and bring it out.

One CEO suggested that instead of seeing ethical leadership as preventing people from doing the
wrong thing, we need to view it as enabling people to do the right thing.

7. Make tough calls while being imaginative.

Ethical leaders inevitably have to make a lot of difficult decisions, from reorienting the company’s
strategy and basic value proposition to making individual personnel decisions such as working
with employees exiting the organization. Ethical leaders do not attempt to avoid difficult decisions
by using an excuse of “I’m doing this for the business.” The ethical leader consistently unites
“doing the right thing” and “doing the right thing for the business.”

The idea that “ethical leadership” is just “being nice” is far from the truth. Often, exercising
“moral imagination” is the most important task. Mohammed Yunus founded the Grameen Bank on
such moral imagination. By taking the standard banking practice of only lending to people with
collateral, and turning it on its head, Yunus spawned an industry of micro-lending to the poor.

The Grameen Bank’s motto is that poverty belongs in a museum. In addition to having one of the
highest loan repayment rates in the banking industry, the bank’s program of lending to poor
women in Bangladesh to start businesses has helped millions of them to be able to feed
themselves.

This leadership can just as often take place within the ranks of organizations as it does at the
highest CEO and board levels. Several years ago, the CEO of DuPont was implementing a new,
stringent company-wide commitment to reduce factory emissions.8 He visited one facility where
the plant engineers insisted that such requirements could not be met. The chairman responded that
the particular plant would then have to be closed—causing hundreds of job losses.

Several weeks later, the plant engineers delivered the news to the CEO that they had figured out
how to meet the requirements—and save money. While we don’t know the names of the plant
engineers who surely spent numerous hours determining how to meet the requirements, we see the
results of their leadership and imagination.

8. Know the limits of the values and ethical principles they live.

...one issue common to the recent business scandals was that

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managers and executives did not understand the limits of
“putting shareholders first.”

All values have limits, particular spheres in which they do not work as well as others. The limits
for certain values, for instance, may be related to the context or the audience in which they are
being used.

Ethical leaders have an acute sense of the limits of the values they live and are prepared with solid
reasons to defend their chosen course of action. Problems can arise when managers do not
understand the limits of certain values.

As an example, one issue common to the recent business scandals was that managers and
executives did not understand the limits of “putting shareholders first.” Attempts to artificially
keep stock prices high—without creating any lasting value for customers and other stakeholders—
can border on fanaticism rather than good judgment. Ethics is no different from any other part of
our lives: there is no substitute for good judgment, sound advice, practical sense, and conversations
with those affected by our actions.

9. Frame actions in ethical terms.

Ethical leaders see their leadership as a fully ethical task. This entails taking seriously the rights
claims of others, considering the effects of one’s actions on others (stakeholders), and
understanding how acting or leading in a certain way will have effects on one’s character and the
character of others. There is nothing amoral about ethical leaders, and they recognize that their
own values may sometimes turn out to be a poor guidepost.

The ethical leader takes responsibility for using sound moral judgment. But, there is a caution here.
It is easy to frame actions in ethical terms and be perceived as “righteous.” Many have the view
that ethics is about universal, inviolable principles that are carved into stone. We need to start with
principles and values, and then work hard to figure out how they can be applied in today’s
complex global business environment.

Principles, values, cultures, and individual differences often conflict. Ethical leadership requires an
attitude of humility rather than righteousness: a commitment to one’s own principles, and at the
same time, openness to learning and to having conversations with others who may have a different
way of seeing the world.

Ethics is best viewed as an open conversation about those values and issues that are most
important to us and to our business. It is a continual discovery and reaffirmation of our own
principles and values, and a realization that we can improve through encountering new ideas.

10. Connect the basic value proposition to stakeholder support and societal legitimacy.

The ethical leader must think in terms of enterprise strategy, not separating “the business” from
“the ethics.” Linking the basic raison d’être of the enterprise with the way that value gets created
and society’s expectations is a gargantuan task. But, the ethical leader never hides behind the
excuse of “It’s just business.”

Despite intense opposition from a number of groups, Wal-Mart CEO Lee Scott won approval in
early 2004 to build a new store in a West Side Chicago neighborhood by listening to and engaging
stakeholders who would most benefit by the value that this new store would create. Partnering with
black community leaders, Wal-Mart appealed to the needs of the community in sections of town
where there was a real need for jobs and stores. Ultimately, the support of the community allowed
Wal-Mart to win City Council’s approval. Wal-Mart also committed to seeking minority

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subcontractors to build the facility and to eventually hiring the majority of the store’s employees
from the local community.

Ethical leadership is about “raising the bar,” helping people to realize their hopes and dreams,
creating value for stakeholders, and doing these tasks with the intensity and importance that
“ethics” connotes. That said, there must be room for mistakes, for humor, and for a humanity that
is sometimes missing in our current leaders. Ethical leaders are ordinary people who are living
their lives as examples of making the world a better place. Ethical leaders speak to us about our
identity, what we are and what we can become, how we live and how we could live better.

Becoming an Ethical Leader

We have been privileged to know many executives that we would classify as ethical leaders. What
these executives have in common is a profound and deep sense of ethical principles, values, and
character at the core of their leadership. They see their job as making others better, and enabling
them to pursue their own hopes and dreams. They are able to get things done in complicated
organizations and societies. But, it is their ethical core which pervades their relationships with
followers, the skills and processes which they use in leading them, their analysis of the contexts,
and their own sense of self.
Becoming an ethical leader is relatively simple. It requires a commitment to examining your own
behavior and values, and the willingness and strength to accept responsibility for the effects of
your actions on others, as well as on yourself.

A “responsibility principle” is a necessary ingredient for “managing for stakeholders” to be useful
in today’s business world. Ethical leaders must consider and take responsibility for the effects of
their actions on customers, suppliers, employees, communities and other stakeholders. If business
were simply concerned with shareholder value, then this “responsibility principle” would be
unnecessary, other than the responsibility to shareholders.

To become an ethical leader, commit to asking yourself the following types of questions:

 What are my most important values and principles?
 Does my calendar—how I spend my time and attention—reflect these values?
 What would my subordinates and peers say my values are?
 What mechanisms and processes have I designed to be sure that the people who work for
me can push back against my authority?
 What could this organization do or ask me to do that would cause me to resign for ethical
reasons?
 What do I want to accomplish with my leadership?
 What do I want people to say about my leadership when I am gone?
 Can I go home at the end of the day and tell my children (or a loved one) about my
leadership, and use my day’s work to teach them to be ethical leaders?

Developing Ethical Leaders

The best way for organizations to develop ethical leaders is to engage in some of these questions.
Viewing business simultaneously in economic and ethical terms helps to send the message that
ethics isn’t just an important set of rules not to violate, but that it is an integral part of what it
means to work at your organization.

There are some concrete steps about how best to develop ethical leaders within the framework that
most global businesses find themselves. The first step is to bring life to a conversation about how
the organization benefits its stakeholders and about understanding the organization’s values. This

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doesn’t need to be a formal program. It could be as elaborate as town hall meetings. Or, as one
executive suggested to us, we simply could have an “ethics” or “stakeholders” moment at most
meetings. Such moments, analogous to “safety moments” at companies like DuPont, set aside a
brief time to raise concerns about the effects of the meeting on key stakeholders, or on a
company’s values and ethics. Equally, the “ethics” moment could elaborate on how the
conversations and decisions of the meeting were aligned with company values.

Many companies have leadership development programs. These programs need to be strengthened
by adding the idea of “ethical leadership.” It is not necessary to use the specific principles we have
developed, but companies can make themselves better by engaging participants in a conversation
about what they see as “ethical leadership.” Executives can develop shared conversations and
conceptions of how “ethical leadership” can be implemented in their particular company.

Executives need to figure out how to have “challenge meetings,” routine processes where anyone
in the organization can raise a challenge to whether or not the company is living its values, or its
enterprise strategy approach. Without the ability to challenge authority, there can be no such thing
as true ethical leadership.

Many fear that anarchy would be the result of such a process. Our experience is just the opposite.
Values, purposes, principles, an enterprise approach—all deliver a disciplined way to think about
how to make the business better and more effective, and help to develop pride in the organization.

…….Ethical leaders speak to us about our identity,
what we are and what we can become,
how we live and how we could live better.

The Road to Ethical, Balanced Leadership

With unanimous agreement about the need to develop leaders who are balanced between strong
ethical sensitivity and the ability to produce results, the challenge is to identifying ways in which a
spectrum of leaders in business education and practice could be a part of the solution. There some
suggestions to overarching systems approach to improving ethical practice in organizations. These
suggestions are grouped under the headings of various attitudes and behaviors that are appropriate
for CEOs and corporate directors, organizational tools and initiatives, and challenges for business
education.

The CEO Perspective

Raytheon’s CEO, Dan Burnham personal in articulating what he viewed as the responsibility of
senior executives:

‘‘Implementing and sustaining ethics programs is important, but we need to do more. Leaders and
leaders-to-be need to focus on the desired end state:

 On the vision for their company.
 On the values and the culture of their company.’’

Burnham continued by asserting,

‘‘The CEO must be the chief ethics officer of the firm. He or she cannot delegate integrity. We
cannot be distracted by resistance in the organization from those who think that the company is
already ethical, or that we’re trying to be social engineers. The CEO must make everyone
understand that the organization’s future is dependent on its reputation. The organization has to be
personal, human, and individual. Every employee must feel empowered and responsible for the

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reputation of the company, and the leader must demonstrate an interest in uncovering problems
and finding solutions.’’

Burnham suggested that CEOs should develop an ‘‘early warning system’’ that identifies problems
and even potential problems. He further urged,

‘‘if unethical behavior is uncovered, it’s important to act swiftly and decisively. My goal is to act
on facts, not emotion. Objective tools to achieve and measure results help take the subjectivity out
of the equation. The right kind of climate can be developed by asking tough questions and
surrounding yourself with those who will tell it like it is.’’

Setting the tone and benchmarking. Top management sets an important tone by encouraging open
and honest communication so that employees feel empowered to raise issues. Burnham reported
that Raytheon and many other leading firms encourage their managers to benchmark the firms they
admire—to look beyond the walls and structures of their companies and industries.

He stated,

‘‘We, at Raytheon, strive for constancy and try to document how the company handled similar
problems has in the past. I think we must create an environment of inclusion; that’s good ethics
and good business as well. I talk about ethics and integrity routinely and make sure others see
these [aspects of business.] You can find at least a couple of speeches on our [Raytheon’s] Web
site that deal with ethics and integrity.’’

In addition to Burnham’s suggestions of things that a CEO can do to improve the ethical climate of
a firm and its reputation, he also responded to the question, ‘‘What happens when an organization
is being investigated by the SEC—or is accused of wrong doing by former employees or by the
contentious litigation of a class action lawsuit?’’

Burnham spoke to the question by stating, ‘‘Adversity is the real test of leadership and integrity.
Trying times test the commitment to a statement of values. If the CEO and his or her team can stay
true to personal values and communicate as openly as possible in the context of legal restrictions,
these firms that demonstrate their ethicality when they are being publicly challenged will come
through this test with their reputations enhanced rather than destroyed. Ralph Larsen, former
chairman and CEO of Johnson &Johnson, said that his company’s famous credo really boiled
down to one core thought, ‘personal responsibility.’ This credo has become a part of the DNA of
Johnson &Johnson, and adherence to it is a requirement for rising through the ranks at one of
America’s most admired corporations.’’

Organizational Tools and Initiatives

Any organization whose CEO has strong ethical values and commitment has a head start in
creating an ethical organization, yet no CEO can review the day-to-day decisions and behavior of
each employee. Successful firms must consequently translate the desire for ethicality into concrete
institutional policies and practices. For example, Pfizer’s program for organizational effectiveness
focuses on four key areas:

 Enhancing organization effectiveness in a global context.
 Developing leaders.
 Building productive, healthy and satisfying environments.
 Improving governance; strategy, structure, process and relationships.

Such proactive elements can together create a system in which ethical leadership can become a
core competency and impetus for organizational effectiveness. A best practice study of succession

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management conducted by the American Productivity and Quality Center found that the exemplars
utilized a matrix to assess leaders on both their results and their demonstrated values. Dan
Burnham pointed out the importance of making integrity a part of any assessment system by
describing a similar system at Raytheon: ‘‘what do we look for in a leadership candidate with
respect to integrity?

What we’re really looking for when we recruit leaders are people who have developed an inner
gyroscope of ethical principles. We look for people for whom ethical thinking is part of what they
do—no different from ‘strategic thinking’ or ‘tactical thinking.’ It’s the ongoing process of
reasoning about what is proper given a set of values and a mission in a very messy world filled
with many complexities.’’

Burnham reported what Raytheon’s Leadership Assessment Instrument says under ‘‘integrity’’:

 Maintains unequivocal commitment to honesty, truth and ethics in every facet of behavior.
 Conforms with the letter and intent of company policies while working to effect any necessary
policy changes.
 Actions are consistent with words; follows through on commitments; readily admits mistakes.
 Is trusted and inspires others to strive to be trusted.’’

‘‘We believe this kind of person will get better results,’’ said Burnham.

‘‘We know that such people will help us build a successful future.’’

Blair Shepherd of Duke Corporate Education also commented on aspects of developing good
organizational tools and initiatives. He asserted,

‘‘Firms that know what kinds of developmental needs their people have and are committed to
providing those developmental opportunities are obviously ahead of companies that simply assume
that the ‘fit will survive’—without asking, ‘fit for what?’ Integrity is probably a more important
developmental need than the ability to understand foreign exchange or transfer pricing.’’

Pfizer’s Mila Baker spoke of ways that ethical leadership can become a core competency and lever
for organizational effectiveness.

First, it is essential to establish ethical leadership as a strategic imperative.

Next, care should be taken to develop a ‘Strategic Ethical Leadership Agenda’ with as much
specificity as possible.

This agenda should describe actions that demonstrate commitment and acceptable conduct as well
as identify actions that do not measure up to the values of the firm. While it is impossible to make
this a comprehensive list, it is important to define a set of ‘‘rules of engagement,’’ which includes
recognition of risk determination and consequences. We have attempted to create a ‘‘roadmap to
ethical behavior’’ through the Pfizer Leader Behaviors and Values.

We put a spotlight on ethics by incorporating this subject in to our leadership and change
management initiatives. We try to increase the ethical awareness, skills, and knowledge of all
employees while encouraging dialogue and conversation with others around ethical dilemmas. We
institutionalize stories on how colleagues deal successfully with issues of integrity. Fundamentally,
we want to create an environment that is ethically competent and ethically sensitive. We strive to
understand the challenges created by the complexity and scale of our organization and what the
implications of these challenges mean for ethical leadership. Perhaps most importantly at Pfizer,
every leader is expected to model what he or she is attempting to instill,’’ Baker concluded.

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Corporate Governance

Since the top of the organization sets the tone for leadership throughout the firm, board of directors
should be asked to assume increased responsibility for developing an ethical corporate climate. In
early 2003, Burnham spoke in New England to the National Association of Corporate Directors
and urged members of this important group to meet their challenge of representing societal and
shareholder interest in high standards of content.

At the Pepperdine Executive Learning Forum, Burnham added: ‘‘Being a corporate director
provides a way of building confidence in a system that has fueled our national success. Leader ship
integrity carries over to corporate governance as well. Every company, no matter how strong and
ethical, needs to take a second look at corporate governance, to take advantage of every
opportunity for improvement. We’ve done close review of our [Raytheon’s] corporate governance.
We feel pretty good about the changes we’ve made:

 We have fewer board meetings, but with lots of interaction.
 We try to focus on large questions without ignoring details.

P4 Management Model and Corporate Governance

Below is a modern model for management and leadership in the 21
st
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 characteristics good modern ethical management and leadership.



Purpose, People, Planet, Probity (or Purity or Principles)

These are (according to the model) the four cornerstones of sustainable success in any modern
organization or business, and a maxim for today's management and leadership philosophy.

Probity means honesty, uprightness - it's from the Latin word probus, meaning good.

'Purpose' is a replacement word for the usual 'Profit' and is appropriate when applying the model
to not-for-profit organizations. Profit-focused corporations may also be helped by using the word
'Purpose' instead of 'Profit', because 'Purpose' is a much broader term - it encompasses profit, and
also encourages consideration of the various aims that all businesses must balance with the need to
make a profit.

People represent staff, customers, suppliers, local communities, stakeholders, etc.

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Planet - the world where we live in (in terms of sustainability, environment, wildlife, natural
resources, our heritage, 'fair trade', other cultures and societies, etc.)

This model is not a process or technique - it's the character or personality of a good ethical
organization, or manager or leader. It's a useful aid too for working with Corporate Governance,
when developing a Corporate Governance code/statement, or for training people, or launching a
Corporate Governance initiative. The aim of all good modern organizations is to reconcile
the organizational purpose (which is typically a series of aims, for example profit for
shareholders, or cost-effective services delivery in the case of public services, together with
supplementary aims such as market growth, geographical expansion, product development, brand
development, knowledge development, technological pioneering, whatever) with the needs and
feelings of people (staff, customers, suppliers, local communities, stakeholders, etc.) with proper
consideration for the planet - the world we live in (in terms of sustainability, environment,
wildlife, natural resources, our heritage, 'fair trade', other cultures and societies, etc.) and at all
times acting with probity - encompassing love, integrity, compassion, honesty, and truth. Probity
enables the other potentially conflicting aims to be harmonized so that the mix is sustainable,
ethical and successful.

For this reason the model is a particularly useful aid in considering Corporate
Governance and Leadership, which by their nature contain many potentially competing or
conflicting obligations. The model is also useful for considering the balance between risk and
responsibility, which is a factor in all organizations, whether for profit or not. Traditional inward-
looking management and leadership skills (which historically considered only the purpose -
typically profit - and the methods for achieving it) are no longer sufficient for sustainable
organizational success. Organizations have a far wider agenda today. Moreover, performance,
behavior and standards are transparent globally - the whole world can see and judge how leaders
and organizations behave - and the modern leader must now lead with this global accountability.

Good Corporate Governance Gives Organizational Benefits

Significant organizational benefits arise from adopting and applying good corporate governance
and ethically leadership. Business and other services organizations derive substantial advantage,
and avoid serious risks, by acting correctly, with humanity, comparison, and with proper
consideration. Corporate governance is a crucial foundation in achieving these aims because it
provides a framework for the organization’s leadership.

Competitive Advantage:

Customers are increasingly favoring 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 organization seeks to achieve.

Better Staff Attraction and Retention:

The staff wants to work for truly responsible and ethical employers. Failing to be a good employer
means good staffs leave and reduces the likelihood of attracting good new starters. The push up
costs and undermines performance and efficiency. Aside from this, good organizations simply
can’t function without good people.

Investment:

Few and fewer investors want to invest organizations 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?

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Morale and Culture:

Staff who works in high-integrity socially responsible, globally considerate organization are far
less prone to stress, attrition and dissatisfaction. Therefore they are happier and more productive.
Happy productive people area common feature in highly successful organizations. Stressed
unhappy staff is less productive, take more time off, need more managing and also take no interest
in sorting out the organization’s failings when the whole thing implodes.

Reputation:

It takes years, decades, to build organizational reputation but only one scandal to destroy it. Ethical
responsible organizations are far less prone to scandals and disasters. And if one does occur and
ethical responsible organization will automatically know are genuinely trying to do the right thing.
People do not forgive, and are actually deeply insulted by organizations who fail and then 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 organizations 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 behavior
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 exceptions is that making a pile of
money and building a great big empire are becoming stigmatized. What’s so great about leaving
behind a pile of money or a great big empire it it’s been at the cost of other’s 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, which can now see more clearly what a real legacy is.

The Five Pillars Of Ethical Business Leadership

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Even if they do not always recognize them, all business executives face moral dilemmas. What
then is new?

First, there’s the rising demand to build ethics into the core of companies’ strategies. Not only do
regulators expect this, so does the rest of society.

These days "society" can make its voice heard more forcefully than in the past. For example, when
the board of Mozilla, the open source software company behind the Firefox web browser
appointed a new chief executive in March 2014 the result exploded in its face.

The board had knowingly hired someone who openly opposed gay marriage. This proved
unacceptable to many of the liberal-minded techies. They saw this as an ethical, not managerial
issue. The resulting social media reaction morphed into commercial retaliation; within weeks the
new CEO resigned.

Second, companies need to embed ethics into the management culture. Only when this happens
can leaders be sure most people will perform with integrity. There are no short term fixes. Each
firm must arrive at its own way of doing this, rather than just going through the motions.

Sometimes the problem is a business leaders simply does not “get” ethics. For example Fortune
Magazine described Citibank as “ethically tone deaf” and its leader as “ethically neutral” as how to
apply ethics within the bank’s particular business context.

Leaders who see the importance of ethics still face the puzzle of making relevant choices as to
what this means for their company. Take for example the recent UN report on what amounts to a
Nazi regime in North Korea. With a catalogue of terrible human abuse and genocide should a
responsible business leader say nothing about this in public, offer no “company view”, remain
silent?

In the end, the choices seem endless, even unmanageable. This is where the five pillars of ethical
leadership in business come in handy. They are Commitment; Relevance; Positive Value;
Influence; and Means not Ends. Used in combination they can help leaders set an ethical
direction and establish the essential ethical tone.

First Pillar: Commitment

The first pillar is an essential starting point for leaders in business wanting to get a grip on ethics.
This pillar requires a leader to show a wholehearted and public sharing of their ethical position.
Only through a personal willingness to fully engage will each leader makes an impact within their
own organization, let alone play a part on a wider stage. This may seem obvious. Yet too many
business leaders seem to believe they can spout about ethics without ever demonstrating a real
conviction of its importance to both themselves and their business.

“If you want to lead, have the courage to do it from the heart.”

Gail McGovern, president and CEO of the American Red Cross. Gail J. McGovern

Commitment therefore always starts from a personal view of what is right, what is responsible.
This is why we often hear about leaders needing to hone their moral compass and others
complaining about the task:

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“Life is hard enough, and I think this constant lecturing on ethics and on integrity by many
stakeholders is probably the most frustrating part of the equation. Because I don’t think
there are many people who are perfect,”

Sergio Ermotti, CEO, UBS Sergio Emotti of UBS
Emotti is an ethically tone deaf leader. Ethics in business is nothing to do with being perfect. It’s
about making difficult choices and being determined to make sure the company does what is right.

This translates into behaving with integrity, openness, respect for others and to contributing in
constructive ways to the community in which the firm operates. Increasingly stakeholders and the
rest of us expect these things!

Commitment also means embracing common values that inspire both the leader and other
stakeholders.

“I think there are universal values–common norms of integrity, honesty, consideration for others. I
believe the responsible company operating to high standards with sound values can make a major
contribution.”

Sir Mark Moody-Stuart, former CEO of Shell:

ACTION!

1. Clarify your own values and those of your organization–how well do they match?


2. Share agreed values frequently–be seen talking about them and explaining why they matter
so much

3. Show you’re willing to exert great effort to get people committed to the core values and
what they mean for each person

4. Through your everyday actions demonstrate integrity, fairness and respect of others


5. Set in motion structures, procedures and processes to help people understand what’
expected of them when it comes to ethical choices–don’t just delegate, be concerned with
how these are implemented.

Second Pillar: Relevance

The second pillar guides leaders to ensure ethical concerns connect to their business–directly or
indirectly. A legitimate leadership concern is therefore:

“How do ethics affect my business?”


Some leaders deal with this tricky issue by denying ethics has any relevance. They argue ethics is
just too subjective and messy. This attitude looks increasingly short-sighted and in the long run not
sustainable.

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Across the world there are growing pressures on all businesses to act responsibly and make a
positive, not a negative contribution. However, there are so many ways a business can pursue
ethical values the choices can seem confusing.

For example, how far should a company aim for sustainability in all its activities? Or bribery may
be forbidden but how will the organization deal with environments where this appears the only
way to win sales? The company may be committed to openness and transparency, but will this
prevail in the face of demands for privacy?

This second pillar therefore encourages a leader to ask:

“Is this ethical choice relevant to our business?”

This is not always simple to answer. Take for example modern day slavery. This may appear to
have little immediate relevance or connection with a company’s daily concerns. But how the
company sources its raw materials and transforms them into final products and delivers them to
customers can seriously damage both brand and reputation. No responsible company wants to be
seen supporting inhuman practices.

A coffee company for instance faces relevance issues when sourcing its raw beans. Are these
picked from sustainable plants without deforestation? Does it pay a living wage to locals and avoid
damaging their way of life? Positive answers in the buying strategy can connect with the business
by becoming a selling point for the final product, as has happened with the Fair Trade brand.

Many issues apparently far removed from any direct relevance may actually have an important
connection. For example, most outsiders would hardly expect the profit hungry Goldman Sachs
bank to support women in poverty around the world. How could this be relevant to its money-
making obsession?

Yet the bank’s philanthropic foundation funds over 10,000 poor female entrepreneurs. Such an
investment occurs of course, partly from a need to polish a tarnished image and to please
employees– giving it a relevance of a kind.

Funding poor women entrepreneurs has unexpected benefits. The bank expects to tap governments
and others companies to turn its $50 million donation into a fund of more than $600 million.

Similarly Cheyne Capital, one of London’s oldest hedge fund managers, seems a typical hard-core
capitalist enterprise, bent only on money making. Yet a new fund has raised up to £300m to invest
in projects with a positive social impact.

Behind this seemingly contradictory activity, lies a trend in which many investors show increasing
interest in how their money can tackle social issues, as well as achieve a financial return.

Making sure the company’s ethical focus has business relevance tends to be mainly a long term
decision. “Doing what’s right” is not a cost benefit exercise, it’s a moral choice.

Expecting a short-term, measurable ROI from such actions would be myopic. It is more sensible to
ask: “does this ethical choice have relevance to us in the long term and if so how?”

“A creative and well managed corporate and social responsibility programme is in the best
interests of all our stakeholders – not just our consumers – but also our shareowners, employees,
customers, suppliers and other business partners who work together with us. Extract from Cadbury
Schweppes Good Governance report

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Action

Using the second ethical leadership in business pillar suggests various practical actions:


1. When facing business choices with an ethical or social implication ask: does this have
relevance to our business now and the long term?

2. Check the ethical implications of the company’s goals and business plans–explore for
hidden benefits and unexpected drawbacks.

3. Ensure all business decisions pass through an ethical “filter” to assess the wider impact on
people and the planet.

4. Seek ways to make a positive, not a negative impact on the operating environment and “do
what’s right.”

5. Establish clear ethical guidelines to ensure all stakeholders understand and subscribe to
them.

Third Pillar: Add Positive Value

Aghast at reading his obituary while still alive, Alfred Nobel saw his likely legacy to the world
would be entirely negative. He redeemed himself by switching his wealth from armaments into
launching the Nobel Peace prize.

The third pillar of Ethical Leadership in business prompts leaders to look for ways to add positive,
rather than negative value to what their companies do.

The notorious Koch brothers for instance devote a considerable portion of their enormous income
to funding political campaigns against every kind of environmental or other regulation.

If “doing what’s right” threatens their huge profits they will seemingly oppose it. They disguise
this with a smokescreen of philanthropic donations to prestige institutions like the Smithsonian.
Critics brand their destructive network of think tanks, foundations, lobbyists and tame politicians
“the Kochtopus.”

Similarly Exxon, the largest oil company in the world has been the loudest voice protesting against
effective international action on climate change. Much of the effort though has shifted to
untraceable sources of money supporting an obstructive stance aimed at undermining efforts to
gain agreement on positive action.

Such activities do not add positive value. Instead they play an entirely negative and destructive
role. They protect narrow, vested interests at the expense of the rest of humanity; quite simply they
are unethical.

Presented by some leaders as a business constraint, ethics can offer many unrecognized
opportunities. There is now evidence for instance, that acting ethically is strongly linked to

1. Improved financial performance
2. Reduced operating costs
3. Enhanced brand image and reputation
4. Increased sales and customer loyalty
5. Raised productivity

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6. Reduced regulatory oversight
7. Improved access to capital

These are positive benefits only the most ethically tone deaf will choose to ignore.

While acknowledging the real value that ethical culture brings to the bottom line, even informed
leaders still worry about how to get the job done. This third pillar of adding value encourages
leaders to go beyond management as usual. Too many companies do the minimum to reach ethics
and compliance standards. This leads to diminishing gains instead of increasing ones.

How can a leader use ethics to add positive value?

A practical step is to make sure ethics and compliance are integrated into operational decision
making. That is ensures ethics permeates the culture and drives changes in behavior. A further
benefit from this is to reduce inconsistencies and the impact of silos

Another positive leader action is seeking to alter the company mind-set. Instead of ethics and
compliance being seen as a defence against misconduct, instead it is used to play a vital role in
contributing to high performance.

For example, only around four out of ten companies integrate ethics and compliance objectives
into their performance and compensation reviews. This provides yet more scope to ensure ethics
add positive value to the company.

Finally, leaders can ensure ethics add positive value by ensuring they help their company reach
beyond education and communication, to affect a variety of company practices including:

Performance appraisals, promotion and recruiting practices, what is celebrated and rewarded and
punished, customers’ services, and sales training.

ACTION

Here are some basic actions leaders can explore:


1. Can ethical issues and concerns be readily discussed in my company without negative
consequences?
2. Does my senior management support and practice high standards of ethical conduct
3. Is my organization clearly committed to serving the interests of all its stakeholders including
customers, employees, suppliers and community, not just shareholders?
4. Is the behavior of our employees consistent with the organization’s mission, vision and values?
5. When we advance or reward our employees is this based on behavior that demonstrates our
company values?

Fourth Pillar: Influence

The fourth pillar is about Influence. Basically this prompts leaders to ask about any particular
ethical concern:

“How can we influence through our ethical actions?"

When it comes to influencing, business leaders face many choices, including support for numerous
good causes. Each will have its own emotional trigger or special appeal. Whatever the final choice
it will be at the expense of many alternatives.

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The many options for exercising influence can leave business leaders puzzled and sometimes
overwhelmed. For instance, what criteria should they use in making the choices?

Body Shop famously campaigns against animal testing of cosmetics. It selected an ethical concern
which it could both influence and use to build its brand. Similarly, Goldman Sachs Group Inc
plans to launch a $600 million fund to help women entrepreneurs in developing countries. It’s an
effort to aid thousands of business owners and, of course, affect the bank’s somewhat tarnished
image.

In asking "How can we make a difference through an ethical concern?” leaders may not always be
self-serving. Instead, they may be directing the company’s efforts in an entirely logical direction.
For instance, when IBM decided to use its computer skills to develop a system to help in disaster
situations it was focusing its influence where it was most likely to make a difference.

The Starting Point is Values

For leaders wanting to maximize their moral or ethical influence the best starting point is values.
These drive behavior and spending time clarifying and promoting them can help in many ways,
including rationalizing what to influence.

However, those with a worldly perspective sometimes try to avoid ethical issues altogether in
running their business. They may argue there is no singular truth on which to base ethical or moral
behavior.

“Well, ethical, I don’t quite know what the word means”

Is the notorious response by Richard Desmond to a question from the Leveson Committee of
Enquiry into the British press? Yet certain values do have a universal appeal and business leaders
cannot avoid taking them into account. For example

 Courage and integrity—the ability to “do what’s right” even when no one is looking
 Love and Kindness—these show up as an organization “with heart”, where compassion,
kindness and mutual respect guide people in facing ethical challenges.
 Justice and Fairness—these exist for example when individuals feel they receive a fair
return for the energy and effort they expend.
 Means matter as much as ends—
 Self-Control-- Putting personal motivations aside and acting with objectivity by doing what
is right.

These are generally better guides for how to run a successful organization than a single-minded
obsession with profits, or a myopic concern with meeting all legal standards.

A one-track concern with financial returns puts the emphasis on accountability, rather than being a
responsible member of either an organization or wider society-- which is what ethics is all about;
and because some course of action is technically legal does not necessarily make it “right.”

Influence of shareholders

Some business leaders use the supposed demands of shareholders as an excuse for avoiding
involvement in ethical matters. They argue ethics is too messy to be useful, and shareholders are
only concerned with making the most from their investment.

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Famously, the economist Milton Friedman argued corporations only had a duty to maximize their
profits. In fact, since the 1960s a significant and still growing percentage of shareholders now have
non-financial expectations about corporate conduct. This appears first as shareholder activism and
secondly as socially responsible investing.

Ethical business leaders must now therefore take into account the social concerns of stakeholders.
For example in the US, both Dow Chemical—over its sale of Napalm, and GM—over board
representation, strongly resisted the idea shareholders could influence fundamental aspects of their
business. Both companies lost the argument in court, and more importantly have lost it within
society as a whole.

Reflecting this we have seen a growing willingness by investors to challenge companies over
many social concerns and particularly about remuneration policies.

There is increasing consensus of what society expects from corporate conduct. This affects both
what business leaders must do about ethical issues and how they go about using their own levers of
influence.

Action

There are some well documented and practical ways to steer a company down a path of ethical
business behavior. Apart from formal regulations directing companies to behave in specific ways,
there are countless guides, case studies and tools available to convert ethical influence into
practical action. Some of the most practical steps are:

 Identify core values and make sure they suffuse the organization’s direction and strategy.
 Establish a formal statement of organizational values and provide a framework of expected
behavior.
 "Values must lead and be right up there in a company's mission statement, strategy and
operating plan.
 Ben & Jerry's Ice Cream founders Ben Cohen and Jerry Greenfield
 Review standard operating procedures and performance measurements—make sure these
do not encourage unethical behavior.
 Lead by example—don’t just talk about values and ethics, personally demonstrate them
 Use existing capabilities to benefit the wider community in which the company operates.

Fifth Pillar: Means not just ends

The fifth pillar requires a focus on means and not just ends. This is when a leader shows concern
with how their organization achieves its goals, not just the goals themselves.

Siemens built all the nuclear plants in Germany – a country that used a lot of nuclear power. In
2011 the company withdrew from the nuclear energy business. But Siemens didn’t quit because of
market conditions. It did not say:

“We’re pulling out because the German government’s move away from nuclear means there won’t
be money in it”.

Instead the company said it was ending its work in nuclear power because of society’s clear shift.
It chose to avoid any future involvement whatsoever in a technology whose only purpose was to be
used in nuclear energy. Its decision reflected an ethical choice--avoiding the taint of a “bad
product” – rather than a simple market calculation.

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This Fifth Pillar encourages a macro view, to look beyond the financial bottom line at the social,
environmental, economic and ethical implications of what the company does.

For example, making a profit can be ethical, but this may still be wrong if how it's achieved
depends on being unethical, for example cheating customers, destroying the environment, harming
employees.

One of the most commonly reasons for misconduct continues to be pressure to do “whatever of
takes” to meet business goals. Another factor is having in place systems that rewarded results over
means.

This fifth Pillar requires leaders to make decisions without regard to their personal interests.
Instead, the focus shifts to the “right decision” for the client or customer--what’s right for
investors, what’s right for the firm, what’s right for the community, and even the world. If the only
way to solve a company deficit is through dishonesty neither you nor the company will be
sustainable. Quite simply an ethical end does not justify the means.

The fifth Pillar says "how we get there" is just as critical as "where do we want to go"--the actual
destination. The implication is the need to build relationships to release the energy and creativity
of people inside and outside the organization.

For example, in 2004 Kimberley-Clerk faced a fierce global campaign against its supply chain
practices, particularly around deforestation.

Rather than acting defensively, the corporation opened a face-to-face dialogue with their
adversary. It even explored ways they could work together. This led to the joint creation of fibre-
sourcing standards, issued in 2009. These have since influenced sourcing practices in the wider
market.

Ways to take the lead on means and not just ends include using corporate governance; stakeholder
engagement; distinguishing leadership from management; and managing risk and reputation.
Action in all these areas can help promote a responsible organization. In every case though, it is
down to the individual leader to decide what is right—that is they must take an ethical stance-- to
use their moral compass to set the organization moving in the right direction.

Take for instance the area of corporate governance. This is how the company keeps all its policies
and processes ethically sound. Experience shows though, it's not enough to rely on regulations,
codes and monitoring behaviour.

Instead, governance must be treated as a cultural issue, an area in which “how we do things round
here” has far more influence than yet more efforts and investments trying to exert managerial
control.

Similarly, stakeholder engagement is another way leaders can hone their ethical credentials.
Stakeholder groups want consistency and transparency, so ethical business leaders make sure this
happens. There are some useful “norms” beginning to emerge in this area to which leaders can
refer if necessary.

These may take the form of an annual report for stockholders, an open-door policy for employees
or a social media account where customers can leave feedback. Essentially, the ethical leader
makes sure everyone commits to the stakeholder engagement process, from the front-line customer
service manager through to the business owner and CEO.

ACTION

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1. Regularly review how goals are achieved in terms of acceptable norms, not just the goals
themselves
2. Look beyond the financial bottom line to assess the social, environmental, economic and
ethical implications of what the company does.

3. Avoid over reliance on formal governance measures to stay ethical, check the effectiveness
of the culture--"how we do things round here".
4. Involve all stakeholders in staying ethical, seeking their full engagement in being a
responsible company
5. Seek to bring consistency and transparency to the company's decision making process.

Five Pillars, countless ethical positions

“What is judged as ethical, and what an ethical choice would look like, is subjective and
varies among individuals and among and within cultures and organizations?”

Institute of Business Ethics, Occasional Paper No 8 2013

Taken together, the five pillars help think through and clarify the approach to ethical leadership in
business. In combination they require companies to go “beyond compliance”, which is still the
main focus of most of today’s leaders, and focus attention on organizational culture.

Often those running organizations do not know how to lead ethically. They struggle to articulate
their commitment to ethical standards, behaviour and practices. The five pillars provide a useful
structure to support this struggle.

Here’s how Maynard Leigh Associates can help you make sense of ethical leadership

 Help you clarify what business ethics mean for your particular organization
 Coach you to understand what it means in practical ways to be an ethical leader
 Run internal programmes to identify and develop core values affecting company culture
 Assist leaders to establish and communicate leadership tone–inspiring people to act responsibly
 Develop managers’ and leaders’ confidence to talk about and promote business ethics
 Advise on generating employee ethical engagement–where people go beyond the basic rules of
compliance
 Develop new, creative ways to encourage people to speak up about ethical issues
 Strengthen HR Team and their ethical role
 Run forum theatre sessions to communicate about ethics in a highly interactive way
 Write an article or feature for you on ethical leadership for your publication
 Be a keynote speaker about ethical leadership at your next company or public event

How to Become More Ethical Business Leader

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There are several tried-and-true tactics that may be employed to improve one’s reputation as an
ethical leader. You may already be using some of these strategies, and others you can add to your
repertoire.

Strategy 1: Make Sure to Walk the Talk

Many leaders believe that doing the right thing is important, but talking about ethics or values
should be relegated to other life domains such as family or religion. They may believe that
employees’ values are set by the time they start working at their organization. Although values are
important drivers of behavior, ethical leaders play a critical role in raising awareness that certain
decisions have an ethical component. For example, an ethical leader may highlight that a decision
to do business in a certain country may not be illegal, but adhering to the country’s business norms
may violate the company’s code of conduct. It is critical for leaders to discuss ethics and values,
and how the decisions they make fit with the company’s espoused values and mission. Talking
about ethics is not enough. Ethical leaders must behave in line with their words. When leaders
espouse the importance of being ethical, but then promote individuals who are disrespectful or
dishonest high performers, it can damage how much the leaders will be trusted in the future.

Strategy 2: Find Your Mantra

Being ethical may seem to be natural, but it takes a lot of work. Much like athletes who need to
train, ethical leaders must develop tools to keep their moral compass working at all times.
Developing a mantra is a way to keep one’s values at the top of one’s mind. A few examples of a
mantra are the following: What would my children/parents think if they saw me engage in this
behavior?; Would I be comfortable if this was on the front page of the Wall Street Journal?; What
would someone I respect or a religious deity think of my actions? It is useful to have a mantra, as
well as other reminders, such as regularly reading an inspirational quote about living a good life,
decorating office space with reminders of what matters in life, or keeping a journal to reflect on
one’s actions.

Strategy 3: Avoid Self-Serving Pitfalls

We have a unique gift for justifying and rationalizing behavior, as we are skilled at interpreting our
own actions as not violating ethical principles. It is important to see when we may be falling into
these biases. We tend to fall for self-interested reasons when we really want something such as a
promotion, a big account, or meeting performance objectives. When wrestling with an ethical
decision, make sure to ask if your ethical decision was aligned with your self-interest. If it is in line
with a personally desired outcome, you may consider revisiting your decision, making sure you are
doing what is right—and not just what is best for you. For example, your company decides to
move and you, as the leader, decide you are entitled to the largest office. Is it fair, given your
seniority, or are you considering if you are using “fairness” to justify your own self-interest? To be

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clear, falling into these pitfalls does not mean you are a bad person. But being vigilant helps you
act more in line with your values.

Strategy 4: Do Not Go at It Alone

Becoming an ethical leader is not a solo voyage. Developing high-quality relationships with
trusted individuals will give you honest feedback about your behavior. An interesting thing
happens as you move up in management—employees will be less likely to critique your behavior.
As a result, you tend to get an overly rosy view of your own and the organization’s actions.4
People must be able to tell you when you are not acting in line with your values, and also show
pride in you when you do the right thing—especially under difficult circumstances. Having a
support group is valuable when you must make difficult ethical decisions. Being an ethical leader
is not a solitary road; it should include a community of trusted challengers and advocates.

Leader’s Behaviour

The real difference comes from the leader’s behavior – how they show up every day. Below are
some examples of ethical leadership.

You Inspire Others to Be Ethical

No matter what style of leadership a manager, teacher, or parent possesses, there are ethical
behaviors to consider in the relationship between the leaders and the people they influence. A true
measure of leadership is the ethical influence the leader has on his or her followers, or
stakeholders. An ethical leader is one that considers positive and negative views and the rights of
everyone involved, as well as ensuring that decisions are made in an ethical manner and members
are held accountable. The ethical actions of a leader enhance his or her credibility and integrity,
which causes followers to trust. Employees, students, and children establish faith in their leader’s
decision making and the choices the leader makes by listening to and watching what they do.

You Are Always on Stage

Ethics is connected to the ways that leaders interact with others and how leaders act when they
think no one is around. When a leader is courteous, kind, and respectful toward others, people
associate these outward actions with a high level of ethical conduct. When people see a leader pick
up trash or help a stranger when the leader thinks they are not being watched, this tells the true
character of a leader. Attitudes and behaviors that are most visible are caring and concern for
others’ needs.

You Communicate with Care

An ethical leader is one that truly emulates a high sense of consideration by being responsive to all
people – not just the people they like, or the people they consider to be worthy of their time.
Additionally, great leaders encourage people from all walks of life, even those with little
leadership experience, to develop their leadership abilities. Kotter (1990) describes this
development of leaders as creating a “leadership-centered culture”.

When leaders generate a team of ethical leaders, the organization becomes a learning organization,
which attracts and retains the best leaders, resulting in a leadership center in which followers are
encouraged to grow.

You Admit Your Mistakes

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People expect their leaders to get the job done by acting upon what they know and being honest by
admitting when they do not know the answer. Being ethical requires being vulnerable. When the
leader openly expresses his or her lack of ability or understanding, they are an example showing
that it is a safe environment where people are free to make mistakes and ask questions.


Through the practice of setting his or her ego aside, the leader builds trust by demonstrating the
competency of authentic leadership. An ethical leader has the ability to be genuine, which provides
followers a safety net to offer opinions and ideas as to how to get things done.

You Inspire Ethical Team Work

Organizing a team of experts requires the leadership skill of valuing team success over individual
success. An ethical leader has the ability to take all the talents of those on the team (or in the
family) and synergize them into a highly performing team that achieves extraordinary results. This
is not an easy task. For instance, talented employees are often so good at what they do that they
bring their attitudes of individualism to work with them. Team member friction, as a result of
combining experts together, may lead employees to voluntarily leave if the leader does not turn
unproductive discussions into team synergy.



People associate ethical leadership with a leader who has the ability to bring people together,
rather than allowing cliques or employee (family) division. This leadership skill of blending
individual achievement and community is associated with great leaders that build high-performing
teams based on ethical principles.

You Run an Ethical Operation

Employees want to work for organizations that are ethical. Ethical operations include hiring
ethical, talented people, promoting the most qualified based on their leadership skills and technical
expertise, rewarding ethical performance results, and operating a culture of commitment by living
the stated core values of the organization.
Through the balance of talent and accountability, the organization has the structural design to
effectively achieve its goals and objectives in an ethical manner. A significant contributor to
effectiveness is the adherence to a performance system that rewards those employees that
contribute and provides consequences to those employees that do not.

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You Have Guiding Principles

A component of ethics is the principle of mutuality. When a relationship is productive, both parties
take responsibility for making the relationship work. From the workplace perspective, this means
that when an employer pays for an employee’s knowledge, in return the employee provides the
organization the best possible work they are capable of.





The Challenge of Ethical Leadership

The challenge of ethical leadership has become a ubiquitous issue for executives and academics in
a variety of fields. Within the recent past, we have read or seen disappointing reports of Olympic
judging caught up in controversy. Award-winning journalists have been fired for fabricating
sources and stories. Political leaders have been brought before the bar of justice or tried by the
court of public opinion. Church leaders have been discovered covering up crimes committed by
their subordinates. And of course, corporate world and Wall Street are feeling the sting of
accusations that go to the heart of investor trust.

From the above we can identify that what some key business and academic leaders are saying and
doing to address public concerns about various strategies and approaches for developing ethical
leadership skills. Ethics, values, leadership, and trust are timely issues of immense importance to
executives attempting to recover from a substantial downturn in the national and global economies.
After a brief review of the context, we can find several leaders from the ranks of senior executives
and academic and human resource development specialists who will describe largely in their own
words their perspectives on and approaches to mediating the epidemic of unethical behavior
incorporations. Individually, these leaders’ comments are insightful and pragmatic. Collectively,
these observations from the basics of a systemic approach to the challenges of ethical leadership
and suggest some responses that offer potential for raising the level of ethical behavior in
organizations.

Is Ethical Behavior Profitable for Businesses?

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Studies in the U.S. and the U.K. have shown that a strong sense of ethics can be profitable.
Mounting evidence suggests that a company’s profitability is bolstered by its reputation as an
honest, ethical business partner. Firms that routinely practice high business ethics and principles
also attract the highest quality recruits and retain employees longer than other firms, according to a
study by the Ethics Research Center (ERC) in Washington.

‘‘The financial performance of companies stating a commitment to ethics is better than that of
companies that didn’t, based on the annual rankings of large companies published by Business
Week,’’

Reports Curtis Verschoor, author of the study ‘‘Corporate Performance is closely Linked to
Strong Ethical Commitment.’’ The report reveals that the excess value a company provides its
shareholder over the total amount of their investments increases significantly when an ethics code
is clearly stated by accompany. The report found that in the 87companies where an ethics code was
clearly stated, the average market value added (MVA) was 2.5 times larger than the average of
companies not mentioning a code of ethics or conduct. For the 47 companies expressing an
extensive commitment to an ethics code, the MVA was three times that of the other companies not
expressing an ethics code.

More recently, the U.K. Institute of Business Ethics (IBE) found similar results from a sample of
350 firms categorized as ‘‘ethical’’ companies. Between 1997 and 2001, the study concluded,

‘‘There is strong indicative evidence that large U.K. companies with codes of business
ethics/conduct produced an above-average performance when measured against a similar group
without codes.’’

Business Leaders Share How They Solved The Biggest Moral
Dilemmas Of Their Careers



In a perfect world, it’s always clear what’s right or wrong. In the real world, things are often not so
clear.Someone does wrong can be your right, which means your right will definitely, at some
point, be someone else’s wrong. Most of the time the "right" choice can be subjective.At some
point in our careers, most of us will have to make tricky ethical decisions. How do you examine
the issue and figure out what to do? We asked seven leaders in the business world to share their
stories and lessons.

1) Sallie Krawcheck, Chair of Ellevate Network and Ellevate Asset Management








Weeks after Krawcheck took over running Merrill Lynch’s
wealth management division, in the fall of 2009, she was
told that the Stable Value Fund, a financial product Merrill
had sold in 401k plans, wasn’t actually so stable. The team
had "messed up," says Krawcheck. They had "managed the
money in a way that something that was supposed to be low
risk and maintain its value had lost value."

Even worse, the people who would suffer most from the
mistakes were low-income earners who invested in the

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"There were two options, one of which was to say tough luck to the Wal-Mart employees who
owned the Stable Value Fund," says Krawcheck. "Or to put money in, in order to increase the
fund's value."

Krawcheck, who had just been fired as head of Citi Group’s wealth management division for
reimbursing clients for their losses, quickly felt a sense of déjà vu in her new role.

"I’d lost my job once for doing this . . . did I want to do it again?" she recalls. "And the answer is, I
did."

She adds: "It wasn’t a lot of sleepless nights. In a way, I had set precedent for myself on this. I set
precedent at [Smith] Barney’s that I was willing to lose my job for it."

I'd lost my job once for doing this . . . did I want to do it again? The answer is, I did.

When Krawcheck came forward with her suggestions, there was a lot of back and forth because
"the banks didn’t have lots of money at the time," she says. "What I will say is that Ken Lewis,
who was the CEO at the time, did support us in making what I thought was the right decision. I
didn’t get fired from it. In fact, you’d never even read about it until today."

Her advice: "We all have to find that line for ourselves and examine the downside. Are you
comfortable with the downside? I didn’t love the idea of losing my job, but that was less painful to
me than thinking about telling the Wal-Mart employees that we had lost money that they had
thought could not be lost."

The lesson: "Know what your indicator is. My indicator has always been my stomach. When my
stomach starts to hurt, I know that something’s wrong."

2) Binta Niambi Brown, CEO And Cofounder of Fermata Entertainment Ltd. And
Lawyer









Fifteen years ago, hours before closing a $3 billion asset acquisition, Brown, who was a senior
associate in her late 20s, received some information that could have sabotaged the entire deal.





At the time, her partner wasn’t reachable and Brown had a
choice to make: either tell her client and risk losing the deal,
or keep quiet until the papers were signed.

She chose to tell the client.

"It was early in my career," she says.

"Even if the deal had been blown up for good, honest
reasons rooted in decent integrity and morality, there’s
always the fear that you’re going to become the associate
whose deal blew up, and now everybody’s talking about
how the senior person wasn’t around and you’re being
Goody Two-shoes and you ruined the deal."

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After disclosing the information she uncovered to her client, Brown was able to help both sides
come to a solution, and in the end, a deal was finalized. Her ability to have good judgment, do
what she thought was right, and not let fear drive her decisions are lessons Brown has carried with
her throughout her career.

Sometimes the things we think could really embarrass us end up becoming our most glorious
moments.

"Without question, I have repeatedly in my career seen that to be the case—just proceeding from a
place of love and integrity and looking to solve the problem and to move the ball forward, as
opposed to fear. Because usually when there’s a moral dilemma like this, the main thing that’s
getting in the way of the ability to make a good decision is that we’re motivated by our fears," she
explains.

Her advice: "It’s the moment where we start giving in to our fears, that’s when people start
making really bad decisions that can be very hurtful and harmful to others. People are afraid their
piece of the pie is going to be cut up and given to someone else, and so that motivates some of
what you see in the business context."

The lesson: Sometimes the things we think could really hurt us or embarrass us end up being the
things that become our shining, most glorious moments.

3) Scott Gerber, CEO of The Gerber Group

When Gerber found out that one of his employees was clocking in his wife who wasn’t actually
showing up until three hours later, the company immediately fired the employee.

Afterwards, the employee came in with his father, who has worked for Gerber for two decades,
and the two pleaded for another chance. He explained that he had a newborn son and that his wife
couldn’t leave for work until he got home. Although it was a tough decision, Gerber and his
business partner decided to give the employee another chance, mainly because his father had been
a loyal employee for so long.

"We made the decision to rehire him," says Gerber. "The decision was extremely difficult because
we caught him technically stealing from the company, and we generally have a zero-tolerance
policy for such behavior. But because his father has worked for us for over 20 years, and vouched
that his son would never do this again, we decided to give him another chance."

The lesson: Loyalty and longevity still matter at some companies.

4) Laurie Peterson, Founder of Build & Imagine Toys













When Peterson started working for big toy companies
more than 10 years ago, she wanted to get young girls
excited about science. Somewhere along the way, she
forgot her mission and found herself—like most in the
industry—advocating for toys catering to boys simply
because they’re more profitable.

"The thinking was that if we design it for boys, then girls
will just play too," she says. "But if we do the reverse and
design it for girls, we don’t know if boys will play. The
thing to do was, by default, design the toys for boys.

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I found that to be morally not right, but I absolutely advocated what I thought was right for the
business, to lead with boys, because we found that to be a more sound business decision,"
continues Peterson. "There I was, year after year, representing this position that the best business
decision we can make is to design toys for boys. I was never my authentic self because of that."

Peterson has since founded her own toy company aimed at teaching STEM skills to both girls and
boys, and featuring "adventurous leading female characters.”

"I now have the opportunity with my own startup to make up the rules, and we get to decide what’s
important," she says.

"We decided to take our industry’s standard and flip it on its head. Instead of designing products
for boys and then looking for opportunities to invite girls to play, we’re designing for girls and
then looking for opportunities to invite boys to play."

The lesson: You need to be the change you want to see.

5) Kathryn Minshew, CEO And Cofounder of The MUSE

Minshew’s toughest ethical decision involved firing a company they had signed on to do business
with.

"They'd already paid us for the Muse recruiting product, but were treating our team so badly
during on boarding that it just didn't feel like how I wanted to do business," recalls Minshew.

"To make it worse, they were really nice to me. It was just the junior staff they treated poorly."

To make matters worse, The Muse was just getting started at the time and was really in need of the
revenue. Still, it felt wrong to work with a company that behaved so poorly, says Minshew.

She adds: "In the end, I gave them a warning, and then when it continued, told them nicely that it
didn't make sense to work together anymore and refunded the unused balance of their money. They
tried to argue, but at that point, my mind was made up. I didn't realize how relieved my team
was—and how much they appreciated it—until after it was all done."

The lesson: "I think backing your team in situations like that is really important, but it's not always
easy. Especially when you're early stage."

6) Anthony Soohoo, Cofounder And CEO of Dot & Bo













"During my time as a product manager on Apple's
PowerBook team, we were gearing up to launch a new
product. As part of testing, we had found that a very small
sample size was flawed and could be harmful. I was under
tremendous pressure to make a decision on whether or not
to hold off bringing the product to market. And there were
good arguments on both sides."

On the one hand, the defected sample size was small and
not statistically significant, and millions of dollars would
be lost by holding off shipment. On the other hand, Soohoo
believed the long-term impact risk was high.

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"If the flaw was bigger than we thought, it could have created a huge loss of trust with our
customers," he says.

When there is a difficult decision to make, make it based on what would create long-term value
instead of gaining the short-term win.

Ultimately, Soohoo decided to delay the launch of the product. "In the end, it came down to taking
a long-term perspective, and it just made more sense to delay the launch," he says. "Putting myself
in the shoes of our customers, I think that's what they would have expected Apple to do. Not a
popular decision at the time, but it was the right decision for the business."

The lesson: "Trust your gut to do the right thing for the customers. When there is a difficult
decision to make, make it based on what would create long-term value instead of gaining the short-
term win. That lesson has remained with me throughout my career."

7) Trae Bodge, Spokeswoman And Senior Editor Of Retialmenot.Com And Cofounder
of Beauty Brand Three Custom Specialists

When Bodge started her company Three Custom Color Specialists back in the '90s, there were
very few products for women of color. And there was a reason why: Creating makeup for darker
skin tones was more costly.

Bodge explains: "A fair-skinned woman may have eight different tones on her face, whereas a
dark-skinned woman may have 25 different tones on her face, so it becomes very hard to cater to a
darker-skinned client. So many brands don’t have darker skin colors because it’s very difficult to
have a range of color for those women. It's difficult, from a business perspective, to have so many
shades available, but we made it a priority.

"I always understand when I see a bigger company not having darker skin tones, because it’s very
difficult in carrying those tones and making a profit on them, but I think it’s important, and I think
that bigger companies should be willing to take a hit in an effort to answer to the needs of women
of color."

From day one, Bodge says her company has made it a priority to introduce a broad range of
shades. Today, she’s thankful to see other makeup brands making it a priority to be inclusive of
women of all skin tones.

The lesson: If you’re looking at your bottom line as a company, part of that equation should be,
am I catering to all consumers? And yes, certain shades will be more profitable and certain shades
will be less profitable, but there’s a middle ground there. It’s a mistake from a PR and customer
service perspective not to cater to all consumers.


Development of Business Incubator Company

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Introduction:

The basic purpose to develop the company is to provide workspace, coaching, and support services
to potential entrepreneurs at early-stage of businesses. Our core objective is to encourage and
support the rural area population male and female (domestic women) to take initiative and
commence their own venture though effectively utilizing the available resources and their skills.
For the attainment of this objective at initial I have decided to develop an organization in
individual capacity which serves as a business incubator for the upcoming and tentative
entrepreneurs.

The basic purpose of this organization is to carry out the trading activity and earn profit through
outsourcing the orders from the Local and Foreign buyers at highly affordable prices. Our primary
purpose to form this organization is to develop to Business Incubator, which will not only educate
and train the entrepreneurs but will help them to continue their ventures through continually
assisting them in their entrepreneurial life.

We are committed to create a diversified value chain through effectively developing the Micro
Level Enterprises with the help of these entrepreneurs and provide value to our customer with
affordable price and the pride to contribute toward a social cause.

This success of the venture will allow us to transform it in to the:

“Entrepreneurial Development Incubator Company”


Entrepreneurial Development Program:

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 Selection of the high potential individuals those who has an ability and they keen to
commence their professional career as an entrepreneur.
 They must be hard working and able to interact with the people highly social can work
under stress.
 They must be able to develop and lead team.
 A comprehensive education and training program will be inaugurate to fully equip them
with the appropriate knowledge skills and abilities to run their own venture in their
respective area of interest and ease to doing business in their respective locality.
 They will be continually monitored and all the necessary assistance will be provided to
them whenever required.
 They will encourage supporting others for the development of their own ventures.
 All the new ventures (Micro Level Enterprises) will be developed on the basis of BOTT
(Built Operate Train & Transfer).