Ethics and Leadership

Share Your Thoughts: Facebooktwittergoogle_pluslinkedin

I just read an article in Inc. online. The article looked at leadership failures at Wells Fargo, Samsung and Chipotle and what they had in common. In a short, online post, the author did a good job of pointing out that the recently published problems at those three companies did not spring full blown like Athena from Zeus’ forehead but were preceded by earlier problems or internal warnings that weren’t heeded.

A reason (actually an excuse) that is frequently put forward for the failure of corporate leaders to take action before a crisis explodes is that they are under pressure to produce market-beating financial results. In fact, that was explicitly stated as a reason for the CEO of Wells Fargo to ignore internal warnings that the pressure to meet financial goals was pushing people to skirt (and sometimes cross) ethical boundaries.

Guy Higgins, Firestorm Principal, Colorado

Guy Higgins, Firestorm Principal, Colorado

I won’t try to dismiss the very real pressure that senior leadership is under to “make their numbers,” but that pressure does not excuse unethical (and certainly not illegal) behavior anywhere in the company. I have a friend who took a job as president of a small company that was part of a large conglomerate. He made his numbers, but he also actively looked for (and found) problems throughout the company. Not necessarily ethical problems, but all sorts of problems that endangered the long-term health of the company. He took action to resolve those that he could while reporting the problems to his boss. His boss’ response was to castigate him for always talking about problems. That attitude by corporate leadership, by boards of directors, and by investors drives people to ignore the swamp and focus on the financial alligator that they have to deal with this quarter. To my friend’s credit, he continued to make his numbers and to do everything within his power to improve the future outlook for the company – but he also left the company and is now happily a vice president at a company that is highly successful without skirting the boundaries of ethics or the law.

These are real pressures, and a leader who doesn’t make those financial numbers is at risk of losing his or her job. That said, Mr. Stumpf at Wells Fargo lost his job anyway, and who knows what is going to happen to him in the future.

As leaders, we’re responsible for the financial success of the company (or mission success for non-commercial organizations), but we’re also responsible for the long-term success of the company. That means looking for problems that can jeopardize the company’s future. And it means taking action to fix those problems. It means not “hoping that the problem will not erupt until after you’re gone.” It means not hoping that you can cash out before the bubble bursts (I spoke with an investment manager shortly after the 2007/2008 crash and he said that a lot of people knew it was a bubble, they just wanted to squeeze every dime out of it before it burst – a lot of them missed).

I’ve posted a great deal about how leadership means hard intellectual effort. In this case, it doesn’t take just that hard skull sweat – this time, it’s a lot harder. This time it means standing up for the ethical thing when there is a very real and likely personal penalty attached to taking that stand – but that’s what being a leader means.

Thoughts?

Share Your Thoughts: Facebooktwittergoogle_pluslinkedin

HOW CAN WE HELP YOU?