Ethical leadership: what FIFA thought us?
Is there something about power that gets people into trouble? Ethical leadership has a compelling case for a business.
It is clear that the egregious acts of dishonesty that destroy careers (and in some cases organisations in their aftermath) have been generally executed by people who hold the most senior roles in their organisation.
Taking a 2015 example, FIFA, one of the biggest sports bodies in the world with a 111-year history, became embroiled in numerous ethical debacles not just over gifts and bribery in recent times but for many years. Or another example from 2012, the Barclays’ libor rate-rigging scandal questioned ethics and resulted in the resignation of its CEO and chairman. We could also write a book on political, banking, property, charity, etc. examples from our own Isle.
Simply put, unlimited power dramatically increases ethical risks.
So how should organisations be more ethical in conducting their business. I proffer that ethical leadership can include:
- the board of directors’ accountability, encompassing an independent director(s), to include supervision of the senior executives;
- 360 degree performance and peer feedback at all levels – from the board down – with budget for training and development against outcomes;
- accounting oversight with control on all spend;
- internal risk and control measures throughout the business;
- moderate incentives at all levels;
- corporate policies, procedures and practices followed by all executives;
- encouragement of whistleblowing.
Each of these items need to be regularly and routinely carried out and reported on to avoid any surprises and to highlight any risks.
In doing so, ethical leader executives should be mindful of the following characteristics that they should bring into their day-to-day working life:
- Authority: establishing clear performance goals and providing guidance for completing tasks.
- Autonomy: allowing their team to complete tasks as they see fit and to their own schedule and providing opportunities for them to grow as individuals.
- Fairness: providing their team with equal opportunities, rewarding those who perform well and withholding rewards from those who perform poorly.
- Care: helping their team develop their skills, showing compassion for their personal problems, organising work so as to reduce stress, and volunteering.
- Loyalty: emphasising pride in the organisation, demonstrating a willingness to sacrifice one’s own well-being for the well-being of the organisation and speaking highly of the organisation to outsiders.
If we relate this to the point about encouraging whistleblowing above, which is a topical issue in Ireland presently with the Protected Disclosures Act 2014 recently enacted, there can be issues for organisations to train staff to understand how they are protected if they disclose a perceived wrongdoing. For example, while an employee with a value of fairness would blow a whistle on the breach of corporate ethics, another individual with the prominent value of loyalty might not do so, protecting the organisation. So organisations must ensure their staff disclose and are informed about their right to raise concerns regarding potential wrongdoing that has come to their attention in the workplace in the knowledge that they can avail of significant employment and other protections if they are penalised by their employer or suffer any detriment for doing so.
Further, training ensures staff are aware that different types of leaders’ moral behaviours elicit different types of responses among followers. For example, being caring and fair is likely to lead to behaviours of helping others, while loyalty is aimed at benefiting the organisation over individuals.
A couple of years’ ago I recall reading an article by Lucy Kellaway, colmnist at the Financial Times, that CEOs should do ‘an annual hubris test’. This has resonated with me ever since. We have to put our cars through NCT tests, so perhaps this is rhetorical but why not a similar exercise for our senior executives to ensure that they remain fit for purpose at the helm and deliver on performance? If this happened in FIFA I question whether the organisation would have faced the public embarrasment from bodies such as Coca-Cola calling on it to set up independent reform commission and the US Attorney General’s intervention on the Association’s perceived uber ethical dilemmas.
Simply put, it should not be correct that leaders believe that they are responsible for the financial success of the company with deserving large financial, and/or other, rewards.
Leaders need to strengthen behaviours that correspond with ethical conduct. Organisations can help by having good structures in place, and by appointing and developing appropriate senior executives with board and independent supervision. However, it is ultimately a leader’s responsibility to develop a more honest and integrity-filled way of doing business for their business.
© CA Compliance Limited 2016