Thursday, 1 April 2010

Ethical Leadership

This week's topic begins to explore the many issues of 'ethics' when applied to leadership - and supports unit 6002 of the L6 CMI qualification in Management & Leadership and unit 7014 of the L7.

Ethics - one of those terms that everyone knows and thinks they understand - right up to the moment when they attempt to examine or explain it!

In the context of leadership, the term 'ethical' usually relates to decisions and strategies, and the foundations on which they are based.

For example:

  1. Is it 'ethical' for a senior leader to commit his or her organisation to a marketing or pricing strategy that is likely to cause financial losses in a competitor, simply to use their superior purchasing power to force down prices to a level that the competitor cannot match?
  2. Or to choose to source goods from a 3rd world country that uses what we in the UK would consider to be 'child labour', in order to reduce costs?
  3. Or to supply goods or services to a country that may choose to use them to make war on another nation or to supress an internal conflict?
In these examples, it may seem possible to make a reasonably clear value judgement.... but imagine that, in example 1, the strategy is a last-ditch attempt to save their own organisation from closure and the loss of thousands of jobs, and that the competitor is a much larger organisation that can more easily bear the impact..... or that in example 2, the jobs filled by children bring wages that enable their families to survive drought or famine... It is often a complex decision-making process and ethics is rarely 'black & white' or straightforward.

This is an issue that affects leaders everyday on some level, as there is probably an ethical implication or consideration in every significant decision a leader makes. Time pressures and stakeholder interests can often make it challenging for a leader to maintain their objectivity and to make decisions in a balanced and considered manner. This is why it is a fundamental concept for key units of a professional leadership qualification.

In the context of the units in CMI qualifications, it is reasonable to take the term 'ethical' to mean 'doing what is right', as opposed to 'doing what is expedient'.

Even this, however, is not a clear guideline. As our second example above illustrates, the concept of 'right & wrong' is not absolute but contextual. Is it ethically wrong for a 14 year old to take paid employment? We might consider this to be unreasonable in a prosperous nation such as the US or UK - but, in a nation that considers marriage quite normal at age 13, is 14 still too young to work?

It is dangerous and potentially misleading to consider all ethical decisions solely from one's own context and perspective. This can be challenging, not just when dealing internationally, but also closer to home, for example when dealing with staff and colleagues from different cultural backgrounds or suppliers from another sector. It can be an interesting point of contention between age groups (as anyone with teen-age children will know) and it can draw clear distinctions between socio-economic groups, even in the 21st century's supposedly egalitarian and classless society. I recently worked with a group of 19 year-old learners and discovered that only 3 out of 20 of them had parents who had paid employment and that 12 stated that neither parent had ever worked. It is inevitable that the values and ethics of a person will be shaped by nurture as well as nature. Thus the ethical 'web' upon which the 'rightness' of decisions can be judged is complex and varied. A leader needs to be sensitive to the implications of their decisions and strategies, weighing them up from a range of stakeholder perspectives, to be confident that they are behaving ethically. Some might say (Karl Marx for instance) that a commercial organisation and a capitalist state is inherently and institutionally unethical, as it is based on the exploitation of the labour of some for the benefit and profit of others. For most of us though, the 'ethics' of our decisions are less esoteric and more pragmatic; is our decision sound? Does it represent the best choice available? Is it the most appropriate choice to best meet the needs of all stakeholders? Ethical dilemmas and unethical decisions are more likely to occur when the needs of one stakeholder completely override the needs of others - for example, the needs of shareholders over those of staff or the needs of the organisation over the needs of society or the community.

What key decisions will you make this week? Try the 'ethical' test on them.... do they represent the best choice for the greater good of all stakeholders?

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