Last week I talked to the leaders of an organisation which is on a journey to combine compliance and ethics management under the umbrella of good corporate governance.

They want to do the right thing. They’ve reached consensus on what ethics management is, and agreed that the company needs both ethics management and compliance and is going to introduce a formal corporate governance policy.

Why am I sharing this? Because leading your organisation to become more ethical is not rocket science. It’s a step-by-step journey in the right direction. It involves two things: the right processes and attitudes, and leaders personally demonstrating how to “do” ethics.

Processes and attitudes

Corporate governance is defined by the UK Institute of Directors as “establishing a framework of company processes and attitudes that add value to the business, help build its reputation and ensure its long-term continuity and success (2010, 6)“.

What can processes and attitudes include?

1. A corporate governance policy in the policy suite, because this is best-practice.
2. O’Toole (2009) describes successful companies in the US, Sweden, Japan, and India which are characterised by a credible belief system, clearly articulated values, a high purpose, and a firm commitment to live and practice these in all their activities and operations everywhere. A credible belief system in other words is a Code of Ethics. Companies use this to “spell out their ethical vision in a way that is easy to understand and remember . . . much like the Constitution offers the ultimate benchmark for South Africans to refer to in matters of rights and conduct”, says Deon Rossouw, head of The Ethics Institute. This Code is not just for employees but for suppliers and business associates, too.
3. Managerial processes that show employees how to do their jobs, and impose discipline. O’Toole (2009) describes this practice as “fixing decision rights and accountability, thus ensuring alignment between overall strategic goals and the actions of front-line business units”.
4. A Code of Conduct that indicates the consequences of unethical behaviour – and rewards those who live out the company’s values.

And then there are the simple, personal steps you can take to be an ethical leader, encouraging people in your teams to be more ethical.

Leaders demonstrating ethics

Being ethical may seem a lofty and unattainable goal. In my clients’ case last week, there was an almost audible sigh of relief when we named the common-sense things an ethical leader in a company is, and does.

Here are some of them:

1. Demonstrate ethical reasoning. Show your team members how you work out what to do in light of the Code and your values. Be vulnerable with your staff as you work out the right response together. To have staff grappling with what it means to be ethical, and how to “do ethical”, is healthy.
2. Be okay with questions. You don’t have to be a saint, always knowing the right option the second you face a complex situation with ethical overtones. Breathe. You will not have a template for every dilemma but you do have a credible belief system. Refer to the Code of Ethics. Refer to your personal value system. Refer to your business processes. Know who to refer staff members to for advice.
3. Coach and mentor your staff on the go. Both of the previous points address this.
4. Tell the ethics stories of your organisation. You won’t always be able to reveal all detail e.g. what a whistleblower said. But you can talk about when your ethical reputation won you new business, or how a finance clerk discovered a wrong payment, reported it and fixed it, or how you’ve reduced your carbon footprint by using different travel arrangements.

Ethical leaders are human, and available to their staff. They show awareness, sensitivity and humanity as well as a steely determination to do the right thing.

References

The Institute of Directors. (2010). Corporate Governance Guidance and Principles for Unlisted Companies in the UK. Available at: https://www.iod.com/news-campaigns/news/articles/Corporate-Governance-for-Unlisted-Companies

[Accessed 22 May 2018]

O’Toole, J. (2009). Connecting the dots between leadership, ethics, and corporate culture.  Ivey Business Journal, Sept/Oct 2009 edition. Available at: https://iveybusinessjournal.com/publication/connecting-the-dots-between-leadership-ethics-and-corporate-culture/

[Accessed 10 October 2018]

Rossouw, G. J. (2018). Ethical leadership is not enough. Written 25 January 2018 in The Ethics Institute monthly newsletter. Available at: https://www.tei.org.za/index.php/resources/articles/ethics-opinions/7495-ethical-leadership-is-essential-but-not-enough

[Accessed 10 October 2018]