When Margaret Thatcher stated there was no such thing as society, it seemed to mark the commencement of 20 years of economic growth fuelled by the concept of high personal reward for success, and the drive for greater and greater returns for shareholders. As Atrill & McLaney (2009, p12) point out, businesses are created by their owners (Shareholders) with the intention of enhancing those owners wealth.
During this time of relative economic prosperity, we witnessed several “ethical” scandals where business leaders appeared to put personal gain above the security of the shareholder investment, leading to false accounting and company collapses, typified by WorldCom, Enron, and Parlamat. However these fraudulent business activities did not seem to deter the dash for growth and commercial prosperity, and it was until the global banking crisis and the collapse of banks such as Lehman Brothers, that the question of the ethical approach of business leadership seemed to return to the agenda, particularly for politicians.
But do ethical CEO’s really have a social responsibility outside their consumer base, and should they actively support a decision that reduces shareholder wealth in the name of Ethics?
Leadership Ethics – The Theory
It would seem to me that a theory that is based on the work of Aristotle or Plato may just be a little confused! What seems clear is that there is this thing called ethical leadership, the concept of which most of us would support, but there is no theory of ethical leadership that appears to be a “comfortable fit” in articulating a best practice model.
Indeed, Knights & O’Leary (2006) point out the failings of various ethical leadership theories yet perhaps fail themselves to bring anything substantially new to the table.
Northouse (2010, pp 386-393) proposes 5 principles of ethical leadership:
• Ethical leaders respect others
• Ethical leaders serve others
• Ethical leaders are just
• Ethical leaders are honest
• Ethical leaders build community
Within this definition I can think of some very ethical leaders I have worked for. The overriding feeling I had with each of them was that they would always do the right thing, even if it financially disadvantaged them or the company. The most common examples I can remember are simple decisions where the company could have “got away with” accounting for some operational expenditure as capital expenditure, thus artificially enhancing the profits. Whilst there were perfectly legal ways of doing this, the ethical leaders somehow new where the line they must not cross was. They knew the difference between legally right and morally right!
Ethics – Beyond the P & L
Business ethics is not just about the legalities or moral responsibilities of business accounting. More companies are recognising the need to represent their shareholders in an ethical way in the way they trade with communities, countries, and the environment.
I was reminded this week of the dreadful events of a gas leak in a chemical factory in Bhopal, India, 25 years ago. (BBC Online News, 2010). No longer is it acceptable for western companies to run substandard divisions in developing countries, neglecting the welfare of their employees or contractors. But then again, even if Nike claims to have stopped kids sewing footballs together in “sweat shops”, they will be doing it for someone else.
At Banco Santander they invest heavily in University sponsorship and grants as a way of giving something back to the community. So is this the cleansing of the corporate sole or good PR!
Can there be such a thing as an ethical tobacco company, whose products are smoked by millions of children, throughout the world, causing addiction and ill health, as well as exacerbating poverty, or is this simply about supporting the ethics of freedom of choice?
Was the deep water drilling in the Gulf of Mexico, about the ethical exploitation of natural resources to free the American people from external energy supply dependency, or the unethical exploitation of natural resources without consideration for the environmental risks? If you subcontract the drilling have you subcontracted the ethical responsibility?
Can an Arms manufacturing business produce and sell weapons systems that will knowingly be used to wage war between nations, ethically?
Can the pursuit of profit by an investment bank, betting on, and often causing the failure of others to makes its money be ethical?
The CEO’s of BP, BAE and BAT could fit Hothouse’s 5 principles of ethical leadership yet still, perhaps unfairly, be seen as unethical in their approaches to business.
The behaviour of an organisation and its leaders can have a significant impact on all those stakeholders involved. In BP, a failure to use caution in the assessment of the risk of equipment failure in deep water drilling, meant a failure to respond appropriately when disaster struck.
The consequence to shareholders has been enormous, both in terms of share value, and future business potential, franchisees who merely use BP as a supplier of fuel have had their gas stations vandalised across America, and as for the employees, when the ethics of an organisation are questioned, so are those of every employee.
After all, if you work for a tobacco company, you are supporting the consumption of cigarettes by everyone who smokes them, no matter what their age and background!
Conclusion
There is no doubt that the ethics of leadership are key for an organisations future growth, and whilst Knights & O’Leary (2006) dismiss the impact of the trait approach to leadership, I would argue that a common feature of the leaders of those business involved in huge financial frauds, is the presence of narcissism and psychopathy. Whilst there is an argument for traits not predicting leadership capability, identifying traits, or even personality disorders that would make someone unsuitable for leadership, may be a more effective deployment of personality measurement tools that measure the “big five” personality factors. (Myers 2007, pp 618-619)
The need for further research on ethical leadership is clear but this aspect of the leadership debate surely demands more empirical evidence and measurement of ethical leadership and its effect on performance. For whilst many companies portray themselves as ethical businesses with an eye on the social needs of those around them, I do not see too much evidence of mainstream businesses sacrificing today’s profits for tomorrows social and environmental needs.
References
Atrill, P. & McLaney, E (2009) Management Accounting for Decision Makers. 6th Edition. Harlow, England: Financial Times prentice Hall.
BBC News (2010) ‘Bhopal recalls gas leak disaster’. BBC News [online] available at http://news.bbc.co.uk/1/hi/in_depth/business/2009/bhopal/default.stm Accessed 12th June 2010.
Knights, D., & O’Leary, M. (2006) ‘Leadership, ethics and responsibility to the other’, Journal of Business Ethics, 67 (2), pp. 125–137, SpringerLink [Online]. DOI: 10.1007/s10551-006-9008-6 (Accessed: 11th June 2010).
Myers, D (2007) Psychology, Eighth Edition. New York, NY. Worth Publishing.
Northouse, P.G. (2010) Leadership: Theory and practice 4th ed. London: Sage.
Monday 14 June 2010
Sunday 6 June 2010
The Authenticity of a Leader
As an executive coach I am sometimes asked to work with executives to help them improve their authenticity. This often involves helping them develop certain behaviours that may reflect either on their own values and beliefs, or perhaps the organisation they are working for. One of the topics I discuss with them is the idea of “fake it until you make it”, which I guess is a form of inauthentic authenticity!
The concept of authentic management is still developing, but seems to be based around the concept of owning your own personal experiences, thoughts, emotions, beliefs, wants values, which form oneself, and then behaving in accordance to that model of who you are. (Gardner et al 2005).
Northouse (2010, chapter 10) reflects the concept that authenticity is developable and therefore is not fixed or rigid. This is further reflected by Erickson (1995) as quoted by Gardner et al (2005) who states that this is not an either or state and therefore leaders can grow by becoming more authentic.
Authenticity and Leadership
Gardner et al (2005) propose a conceptual framework for authentic leader and follower development, with the concept that the antecedents, or catalyst of authentic leadership starts from the personal history and key trigger life events. A large dose of self awareness, enlightening the self view of Values, Identity, Emotions, and Motives/Goals, balanced with Self Regulation, which includes the internalised processes, balancing processes, the transparency of relationships, and behaviour that matches the values, goals and identity, sets the authentic model of behaviour that is then reflected or modelled by authentic followership.
Having worked with a number of CEO’s and Chairman in my career I can understand the validity of the concept of authenticity, as having a leader who is “real” and follows what they truly believe and value, is attractive to potential followers. Simply put, if you know your Leader is real and authentic and walks the talk, you will model this behaviour creating an authentic contagion across the organisation.
It is normally at this stage of any discussion on Leadership for someone to use Nelson Mandela as their example, and Northouse (2010, p213) doesn’t let us down! He discusses the strong moral values and conscience, which he believes are essential in an authentic leader, and indeed it was Mandela’s authenticity that allowed him to cross from terrorist to prisoner to transformational leader of his country. But was Mandela a strong morally authentic man in his early days fighting with the ANC? In truth I have no idea but I raise the point to emphasise that authentic behaviour can be learnt.
I worked for a CEO, intellectually and academically brilliant, who had strong and perhaps moral values, and authentically followed these values in his honest leadership of the business. He was also transparent, partly driven by his challenging and vocal style, yet he lacked the connectedness and positive disposition argued for in many authenticity models. He was ferocious in the way he challenged performance, yet you always knew there was no easy ride or emotionally engaging relationship on offer. So was he authentic?
Gardner et al (2005) posits the idea of identity, through the self –identification of fixing and expressing one’s own identity both internally through reflection and externally through the way you present yourself. Whilst I agree that this is a way to help become aware of your identity, I don’t accept the concept that it is either a fixed state or even well formed state, and that identity is an evolving thing that changes due to life events and experience. My point of this argument is that your identity, particularly your working identity, is something that becomes clearer with age and experience and as discussed by Ibarra (2004, chapter 1) tends to become apparent as we enter the second stage of our working life.
Therefore, the model of authentic leadership demands such a level of self awareness and indeed self acceptance or contentment, I would argue most of us never reach this point and those that do, take many years to do so.
The Role of Ethics and Morality in Authentic Leadership
The academic literature on this subject emphasises the importance of such things as values, compassion of the heart, trust, and integrity as vital ingredients of authentic leadership. The idea of self awareness, self-discipline, passion of purpose, combined with integrity, trust etc, implies an importance of morality as well as ethics within this model of leadership.
Can you be an authentic immoral leader? I guess not when you consider the importance of trust. However, who defines what is moral or ethical? Is it ethical or morale to hunt whales of scientific research, whilst putting whale meat in the shops of Japan, many Japanese would say yes! Is it ethical or morale to sell arms to a country who you know will use them to oppress its own people or against a neighbouring state?
My point here is that I accept the view proposed by Gardner et al (2005) that a clear ethical and morale boundary should be transparent within an organisation, I am just not sure that those boundaries have to be particularly ethical or morale to allow authentic leadership. In other words, having boundaries and living by them is more important than what they are. After all, it is matching the behaviour consistently with the vision, values, and identity of the leader that is the real issue of authenticity.
Conclusions
I struggle with the idea of a leadership model that seems unattainable for most people. My argument is that Garner et al (2005) have proposed such an idealised model of leadership that it simply doesn’t happen very often in reality.
They argue that trigger events in life stimulate the drive for personal development, but I would argue that to achieve the required level of self insight, belief, strength of morality and ethics to transport these into your new leadership self, trigger events need to be significant, and potentially traumatic. I am not convinced by the authors view that positive trigger events are equally as effective, for in my experience, feeling good about a positive event is not as effective as the huge drive bought on by life changing tragedies or difficult events that happen to us through our lives.
We then come to the influences in a business environment that move you away from always being able to behave in a way that always reflects your values. In other words, in business we all have to do things that are unpleasant, difficult, or that we disagree with, particularly when serving a shareholder base who are investment return focused rather than organisational behaviourally focused.
I see authentic leadership sitting well with the idea of finding your passion in life and seeking out the work you love (Williams1999). But the realities of corporate business life are that the contradictory demands placed upon leaders makes a true model of authentic leadership difficult to achieve. The lack of empirical evidence to prove the benefits of such approach hinder this cause further.
References
Gardner, W.L., Avolio, B.J., Luthans, F., May, D.R., & Walumbwa, F. (2005) ‘“Can you see the real me?” A self-based model of authentic leader and follower development’, The Leadership Quarterly 16 (3), pp. 343–372, ScienceDirect [Online]. DOI: 10.1016/j.leaqua.2005.03.003 (Accessed: 4th June 2010).
Ibarra, H. (2004) Working Identity; Unconventional Strategies for Reinventing Your Career. Boston, MA. Harvard Business School Press.
Northouse, P.G. (2010) Leadership: Theory and practice 4th ed. London: Sage.
Williams, N (1999) The work we were born to do; find the work you love, love the work you do. London, England. Harper Collins Publishers
The concept of authentic management is still developing, but seems to be based around the concept of owning your own personal experiences, thoughts, emotions, beliefs, wants values, which form oneself, and then behaving in accordance to that model of who you are. (Gardner et al 2005).
Northouse (2010, chapter 10) reflects the concept that authenticity is developable and therefore is not fixed or rigid. This is further reflected by Erickson (1995) as quoted by Gardner et al (2005) who states that this is not an either or state and therefore leaders can grow by becoming more authentic.
Authenticity and Leadership
Gardner et al (2005) propose a conceptual framework for authentic leader and follower development, with the concept that the antecedents, or catalyst of authentic leadership starts from the personal history and key trigger life events. A large dose of self awareness, enlightening the self view of Values, Identity, Emotions, and Motives/Goals, balanced with Self Regulation, which includes the internalised processes, balancing processes, the transparency of relationships, and behaviour that matches the values, goals and identity, sets the authentic model of behaviour that is then reflected or modelled by authentic followership.
Having worked with a number of CEO’s and Chairman in my career I can understand the validity of the concept of authenticity, as having a leader who is “real” and follows what they truly believe and value, is attractive to potential followers. Simply put, if you know your Leader is real and authentic and walks the talk, you will model this behaviour creating an authentic contagion across the organisation.
It is normally at this stage of any discussion on Leadership for someone to use Nelson Mandela as their example, and Northouse (2010, p213) doesn’t let us down! He discusses the strong moral values and conscience, which he believes are essential in an authentic leader, and indeed it was Mandela’s authenticity that allowed him to cross from terrorist to prisoner to transformational leader of his country. But was Mandela a strong morally authentic man in his early days fighting with the ANC? In truth I have no idea but I raise the point to emphasise that authentic behaviour can be learnt.
I worked for a CEO, intellectually and academically brilliant, who had strong and perhaps moral values, and authentically followed these values in his honest leadership of the business. He was also transparent, partly driven by his challenging and vocal style, yet he lacked the connectedness and positive disposition argued for in many authenticity models. He was ferocious in the way he challenged performance, yet you always knew there was no easy ride or emotionally engaging relationship on offer. So was he authentic?
Gardner et al (2005) posits the idea of identity, through the self –identification of fixing and expressing one’s own identity both internally through reflection and externally through the way you present yourself. Whilst I agree that this is a way to help become aware of your identity, I don’t accept the concept that it is either a fixed state or even well formed state, and that identity is an evolving thing that changes due to life events and experience. My point of this argument is that your identity, particularly your working identity, is something that becomes clearer with age and experience and as discussed by Ibarra (2004, chapter 1) tends to become apparent as we enter the second stage of our working life.
Therefore, the model of authentic leadership demands such a level of self awareness and indeed self acceptance or contentment, I would argue most of us never reach this point and those that do, take many years to do so.
The Role of Ethics and Morality in Authentic Leadership
The academic literature on this subject emphasises the importance of such things as values, compassion of the heart, trust, and integrity as vital ingredients of authentic leadership. The idea of self awareness, self-discipline, passion of purpose, combined with integrity, trust etc, implies an importance of morality as well as ethics within this model of leadership.
Can you be an authentic immoral leader? I guess not when you consider the importance of trust. However, who defines what is moral or ethical? Is it ethical or morale to hunt whales of scientific research, whilst putting whale meat in the shops of Japan, many Japanese would say yes! Is it ethical or morale to sell arms to a country who you know will use them to oppress its own people or against a neighbouring state?
My point here is that I accept the view proposed by Gardner et al (2005) that a clear ethical and morale boundary should be transparent within an organisation, I am just not sure that those boundaries have to be particularly ethical or morale to allow authentic leadership. In other words, having boundaries and living by them is more important than what they are. After all, it is matching the behaviour consistently with the vision, values, and identity of the leader that is the real issue of authenticity.
Conclusions
I struggle with the idea of a leadership model that seems unattainable for most people. My argument is that Garner et al (2005) have proposed such an idealised model of leadership that it simply doesn’t happen very often in reality.
They argue that trigger events in life stimulate the drive for personal development, but I would argue that to achieve the required level of self insight, belief, strength of morality and ethics to transport these into your new leadership self, trigger events need to be significant, and potentially traumatic. I am not convinced by the authors view that positive trigger events are equally as effective, for in my experience, feeling good about a positive event is not as effective as the huge drive bought on by life changing tragedies or difficult events that happen to us through our lives.
We then come to the influences in a business environment that move you away from always being able to behave in a way that always reflects your values. In other words, in business we all have to do things that are unpleasant, difficult, or that we disagree with, particularly when serving a shareholder base who are investment return focused rather than organisational behaviourally focused.
I see authentic leadership sitting well with the idea of finding your passion in life and seeking out the work you love (Williams1999). But the realities of corporate business life are that the contradictory demands placed upon leaders makes a true model of authentic leadership difficult to achieve. The lack of empirical evidence to prove the benefits of such approach hinder this cause further.
References
Gardner, W.L., Avolio, B.J., Luthans, F., May, D.R., & Walumbwa, F. (2005) ‘“Can you see the real me?” A self-based model of authentic leader and follower development’, The Leadership Quarterly 16 (3), pp. 343–372, ScienceDirect [Online]. DOI: 10.1016/j.leaqua.2005.03.003 (Accessed: 4th June 2010).
Ibarra, H. (2004) Working Identity; Unconventional Strategies for Reinventing Your Career. Boston, MA. Harvard Business School Press.
Northouse, P.G. (2010) Leadership: Theory and practice 4th ed. London: Sage.
Williams, N (1999) The work we were born to do; find the work you love, love the work you do. London, England. Harper Collins Publishers
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