ethical leadership in business

Why is Ethical Leadership Important in Business?

19 February, 2020

Edited 19 August 2020

When we published this article in early February 2020, it was with great hope that the trends we’d been watching develop would lead to an increased focus on ethical considerations and practices in business. We had no idea that a pandemic would change the way the entire world operated. It is interesting to note that, despite the upheaval caused by this crisis, the article is perhaps even more relevant now that when it was written.

As 2020 kicks off there’s hope it will be the year of the ethical workplace. Communities globally are becoming increasingly vocal about their expectations of business and government. Businesses are responding to the growing evidence pointing to the many positive benefits of strong ethical leadership in terms of brand safety, reputation management, staff retention, managing compliance and growing market share.

Who wouldn’t want to be bathing in the glow of stakeholder approval, presenting sterling balance sheets to the board and presiding over a workforce of happy, motivated and loyal employees? Particularly when there are high profile examples of the fate awaiting organisations which misread or disregard public sentiment on issues which affect the lives and futures of the communities within which they operate.

So, how do you arrive at this enviable position?

Organisations globally are having to clarify their values, and develop new strategies and ways of operating.

Technology is providing solutions to previously intractable problems, but at what cost? Programming the machines throws up questions about human ethics and impulses. And who is doing the programming? A study has shown that the diversity, or lack thereof, in the people creating AI has resulted in shortcomings in the technology that tend to impact minorities and women, with historical biases and power imbalances being replicated.

A millennial workforce brings with it new sensibilities. Company values which align to their own are important to this cohort, and having their voice heard matters. While a corporate culture in which employees can challenge decisions and make a contribution offers organisations many benefits, Cranlana Centre CEO Vanessa Pigrum notes that “the difficulties that staff face in challenging authority come at a time when individuals are becoming more aware of their rights to access information about business practices, whether as employees or consumers.”

The climate crisis is forcing businesses to re-evaluate how they operate, both in practical terms and to mitigate the impact of their larger carbon footprint, with former High Court judge and royal commissioner Kenneth Hayne warning directors they have a legal duty to act on climate change risk, include it in corporate strategies and report on it to shareholders, raising the real prospect that boards failing to act could end up in court.

There will also be the challenges we don’t yet know or can’t anticipate. So how does a leader prepare to meet and successfully navigate them? A strong ethical framework for decision making is crucial. Confidence in your moral agency and ethical leadership capacity will prepare you for the foreseen, and unforeseen, changes of the future. Invest in your own professional development and that of your team to make sure you share an understanding of the ethical choices you and your organisation are facing. 

“The need for leadership development has never been more urgent. Companies of all sorts realize that to survive in today’s volatile, uncertain, complex, and ambiguous environment, they need leadership skills and organizational capabilities different from those that helped them succeed in the past.….” The Future of Leadership Harvard Business Review.

Executive education plays a vital role in helping leaders examine, test and consolidate their capacity.  Choosing the right leadership course means first identifying your strengths and acknowledging the areas which need buttressing. Consciously leave your comfort zone, find a program which will challenge your perspective and bring a whole  new level of thinking to your leadership.

Leaders that have done this hard work are better prepared to make the right decision at the right time for the right reason, and the businesses that recognise the importance of ethics and integrity are strongly positioning themselves to move confidently and positively into the future.

Cranlana Centre for Ethical Leadership, February 2020

Cranlana Centre for Ethical Leadership’s programs include the 2 day Executive Ethics, 6 day Executive Colloquium and year-long Vincent Fairfax Fellowship. We also deliver online and tailored corporate programs. Find the right program for you.

Photo by Patrick Robert Doyle on Unsplash