Doing The Right Thing?

Why ethics is important for leaders and your company

by Charles Molineaux

March 6, 2009

F or Elizabeth Kiss, president of Agnes Scott College, the road to America's financial debacle has been a crooked primrose path she knows well.  "It was, in a sense, an ethical meltdown," she says with a sigh.  "We have to recognize a deep truth about human nature, which is that we have a certain shadow side around fear and around greed." 

Formerly director of the Kenan Institute for Ethics at Duke University, Kiss professes a grim sense of déjà vu at the cascade of bad decisions now being blamed for the crisis.  "We've seen a period where it's been a period of great prosperity," she notes.  "And a lot of people have been getting rich.  That breeds a lot of greed." 

From allegations that a single financier, Bernard Madoff, bilked investors of a stunning $50 billion to the millions of clearly questionable loans now cumulatively crushing one institution after another, advocates for ethics say the business world is now reaping the painful consequences of a "wink-wink" attitude towards doing the right thing ... and is trying belatedly to clean up its act.

Like prodigal sons (and daughters) crawling from the disastrous consequences of their own bad judgment, corporate and government entities, according to educators, are turning to ask for navigational assistance from those who've long advocated and charted the high ground.

"The spikes in interest are the most I've seen," marvels Dr. Betty Siegel, president emeritus of Kennesaw State University and director of its Siegel Institute for Leadership, Ethics & Character.   "It seems to me that right now cynicism really is at an all-time high.  It's the highest I've ever experienced.  Certainly this existed before Enron, but now we have examples of leadership that led to some really disastrous results."

Good For Business. Good For Businesses.
A rediscovery of the importance of ethics is experiencing a resurrengence in the business world.  Atlanta's Turknett Leadership Group reports brisk business for its assessment and coaching programs that concentrate on values and character. 

Susan Hitchcock, Turknett vice president of client services, says the firm has seen "a marked increase in inquiries over the past year."
    
"Holding our own in this economy says a lot," President and Co-founder Lyn Turknett says. "I do think that people are extremely concerned now about how businesses are run, about the values of the people who run them and how that plays out.  I think people have seen what happens when character isn't there."

Even in institutions in which "values" have long been emphasized, leaders say the time has come to be more overt about them.  The south Atlantic division of the American Cancer Society has promoted a values program since 2003, but only in the past few months has it trumpeted them with its first "Values Awards" at its management development conference.  "We needed to embrace it," explains division Vice President Nancy Dove, "because of the things that are going on in the country and in the world.  We thought it was important not only to have those values in place but also recognize people who live those values."

Such recognition confronts a very different picture in many of today's headlines.  "We've seen surveys that show a lack of trust in financial institutions and the corporate world," says Hitchcock.  "Not only us, but some of our colleagues have seen an increase in attention, people talking more about ethics, certainly in the last several months."

Turknett looks at the wreckage of dozens of banks and harkens back to the giddy risk-taking of the 1990s Internet bubble when glorious payoffs that looked too good to be true ... were ... of course.

"We've had several times," she says, "when certain oddities of business make the kind of risk and the kind of lack of attention to fundamental value and values profitable.  That just doesn't last long term.  Time and time and time again, you find that that's going to sell you down the river, personally, and as an organization.  Character and ethics. ... It's not just the right thing to do.  There are lots of studies showing that ethically run companies make more money.  But you also just put yourself at so much risk, because, finally, it blows up."

The Basics
That, Turknett fears, is the biggest challenge. "I think we need to figure out how to keep it fresh.  We have to keep it from becoming just a 'program of the month' and make it something everybody thinks about every day.  What we call 'character' needs to be as much a part of the everyday conversation, as much a part of what people are concerned about, as profit.  I think that's essential." 
    
Such conscious, overt, permeation has become the rule for Marcia Taylor, CEO of Bennett International, a trucking company and one of the largest female-owned businesses in the country.
    
"Our country has lost its way," she laments.  "Over the years, in companies that have had a strong values base, you can see how those values have been eroded."  Taylor says values such as ethics, integrity, diversity and spiritual commitment have been part of her business for decades but that, more recently, she has made a point of making them more obvious.
    
"We've always had a sense of values, but they probably didn't have as much prominence.  Those values need to be our base and identify us.  [They are] part of our training, part of our orientation.  Our values system is on our website.  The decision we make based on our values might not always be popular, but it will be the right decision.  That makes it easy."

Retooling (With The Right Tools)
"Ethical leadership is more than just compliance," Siegel says.   "It's not just that which is legal but that which is ethical."  In the wake of the financial industry's missteps and meltdown, ethics scholars look with hope, but also some misgiving, toward what they expect will be a new raft of regulations to head off future disasters.  Inasmuch as the massive Sarbanes-Oxley legislation that followed the Internet and Enron implosions provided far more rules for businesses to follow, but still didn't prevent the latest debacle, educators say lawmakers shouldn't simply construct a complex new legal framework and declare "problem solved." 
    
"I think if they do, they'll be missing the important part," Siegel warns.  "We want a quick response.  But to me that may be very temporary."
    
"We do need laws.  We do need regulations," agrees Agnes Scott's Kiss. "But I do think that there is no substitute for character.  Whether you're a politician or whether you're a business person, there are standards.  There are certain lines that you don't cross.  There are certain questions you always need to ask yourself.  That's character." 
    
Turknett says she draws a clear distinction with her clients that it's not about the law.  "We tell them that we are not going to teach them about compliance.  We are going to talk to them about ethical leadership.  It's quite different.  We go berserk after something like this and there tends to be excessive regulation.  For a while, we get incredibly lax.  And then we move the needle 180 degrees. That kind of thing is silly." 

Not In Our Stars, But In Ourselves
Turknett says a truly vigorous reform effort may be on standby, pending a period of contemplation.  To all those who still see the latest financial upheavals, and the questionable decisions that created them, as "brand new" and "unlike anything we've seen before," she says you may have a point.
     
Unfortunately. 
    
It may truly be different this time, she declares, because this time the culpability and self-serving enabling behavior have been so widespread.
    
"In 2003," she recalls, "We could all point fingers at somebody else, at the Worldcoms.  We saw blatant fraud there.  We saw silly business models with Enron and the Internet bubble.  But, this time, so many of us were complicit.  Nobody was looking too hard as they saw their own real estate go up, as they refinanced their mortgages and saw their friends refinance, as their portfolios were going up  Almost everybody was involved in making money on this bubble."
    
Kiss sees an unflattering picture emerging.  "One of the difficult things is that in so much of our ethical behavior, we are herd animals.  We take our cues from people that are around us.  Many people just go along.   They won't raise their voices.  They won't try to be a change agent.
    
For Turknett, the fiasco surrounding Bernard L. Madoff Investment Securities is a frightening example.  Its founder is now charged with fraud, but for years, the firm appeared to generate handsome profits while actually losing billions.  How?  "I think there is something evil going on there," she says.  "I just can't understand that.  No one knew?  He had organization.  How can that happen?"
    
Some introspection, she theorizes, may be in order.  "It's hard to look at ourselves, but I think that's happening.  People are turning inward.  They're looking at themselves a little bit.  I think maybe that's why it's a little quiet right now.  And I think that's right.  I think organizations are probably doing some soul-searching, and individuals are doing some soul-searching."

Changing Course
While current business leaders ask for help, educators have higher hopes for the next generation.
    
Siegel speaks enthusiastically about her plans to assemble a new, international, "leadership academy" for American and foreign students alike.  In her vision, position papers now in development would lead to active solicitation of support from potential backers and universities by this fall, then an actual launch of programs by summer 2010.
    
The time, she says, is right.  "Although we see extraordinary excesses of those who are not trustworthy or are self-aggrandizing, there is a growing movement of people who are vitally concerned with being very much involved in the principles of ethical leadership in all aspects of society."
    
Taylor says she sees it, too, not at the corporate level but with individuals.  "I certainly recognize it when people come to our company to interview.  People are searching for companies that have strong values, much more so than corporations are searching for those values.  They want to work for a company where they know there's a strong values system there."
    
Kiss says retrofitting ethics onto the contemporary corporate world is a tall order, but possible. "That's the thing about human culture," she says.  "We're always tinkering with the plane while it's flying in midair."  The trick, she theorizes, is seeding the culture with "change agents," executives and employees unafraid to speak out. 
    
"If you can create those and cultivate the strength to stand up for your values even in the face of social pressure, that person can then sway others in a positive way.  We don't need for everyone to become a type of moral hero, but as long as we have more people who are willing to stay up in the face of pressure, they will then have a greater chance of shaping culture.
    
Siegel says the time is right, largely because of widespread shock and cynicism touched off by headline-grabbing cases of executive malfeasance and their painful consequences to society.
    
"I think there's absolutely a desire.  I think is an extraordinary need," Dr. Siegel says. "I would despair if I think we don't do something about it.  It can only get worse until there is some pedagogy of hope.  Perhaps we are in for Renaissance.  I hope we are.  I think we are.  I think it can happen."

---

Dr. Betty Siegel's Basic Principles Of Ethical Leadership
1)  TRUST: Simple enough, but indispensable.  "This," she insists, "is ethics in practice, trust.  Trust means that you get better work done, more significant work done, if it's collaborative.  That happens if you trust each other."
    
2)  RESPECT: How do people within a company, a department, a community see each other?  Do they relate in a respectful way. "Respect can be identified like this, I think:  'All people are able, valuable and responsible and should be treated that way.'"
    
3)  OPTIMISM: This, too, involves tying into how we see our colleagues, our subordinates, everyone around us.  "We identify this with the notion that all people have untapped potential if we find a way to work with it."
   
4)  INTENTIONALITY: Or, perhaps, deliberate ubiquity.  Decision-makers in an organization must consciously, intentionally, choose to have ethical leadership permeate all aspects of that institution.  "We use the metaphor of a starfish," she explains.  "A starfish can open an oyster shell very quickly if all five arms are working together in unison."  The "arms" of an institution, she says, could be place, programs, policies, processes and, very importantly, people.  "If you're a place that's hospitable [to ethical leadership] and the people are not, you're not in synch.  All parts of your institution need to be in synch, in alignment."