Leadership commitment to ethics: A case study

Building an ethical culture in an organisation starts with the leadership of the organisation. Without strong and clear leadership commitment, any attempt to introduce an ethics management programme is doomed to failure. The positioning of leadership commitment within TEI’s framework for the governance of ethics is depicted in the figure below.

 

 

Leadership commitment to ethics: A case study

Dr Leon van Vuuren

Building an ethical culture in an organisation starts with the leadership of the organisation. Without strong and clear leadership commitment, any attempt to introduce an ethics management programme is doomed to failure. The positioning of leadership commitment within TEI’s framework for the governance of ethics is depicted in the figure below.

 Leon 1

Leadership commitment to the governance of ethics framework.

Workplace situations frequently require leadership ethical commitment, whether of a pro-active or reactive nature. Run-of-the-mill ethical challenges are usually solved rather quickly by utilising prescripts documented in ethical standards (e.g. codes and policies). More complex ethical challenges (or dilemmas), do, however, require more conscious and concerted application of leadership commitment.

The most challenging ethical dilemmas often occur at the core of an organisation’s identity, i.e. at the centre of the very business, it engages in. An identity is the shared understanding of the central, distinctive, and enduring purpose of the organisation.

It appears that organisations seldom consider the nature of their products in terms of the potential harm they may cause to consumers and societies. A case in point is the so-called ‘sin’ industries. These consist of organisations who either a) cause harm to employees, societies and the environment during their production and manufacturing processes, e.g. organisations in the extractive, agricultural and energy-producing sectors; or b) cause harm to their eventual consumers, societies and environments, e.g. tobacco and alcohol manufacturers, gambling institutions and weaponry and armaments producers. The harm could be direct, e.g. where the products contain carcinogenic elements ingested by consumers, or indirect, i.e. where the products could cause addiction with consequential social ills.

But what about organisations that engage with stakeholders or business partners that have dubious identities or reputations? For example, stakeholders, partners and clients that acquired their own assets through illegal or socially (ethically) questionable means? As an example, of late the banking sector on all continents has been under pressure to adhere to strict regulations relating to knowingly or inadvertently abetting money-laundering by drug cartels and other crime syndicates.

When is money ‘dirty’ money though? In an ironic way, even dirty money could be put to good use when it finds its way back into the economy or fiscal systems. The question can then be posed: When, and to what lengths should organisations go to moralise about the source(s) of their or their stakeholders’ income? This is relatively easy to judge when there is factual evidence that the money is of criminal, law-breaking, origin. It is, however, more difficult to make a moral call on engagements that have more subtle consequences, e.g. when such engagements may (or may not) lead to perceptions that may harm some dimension of the organisation’s reputation. In the latter example, there may be diverse perceptions on whether reputation, which at best is a rather vague concept, will be tarnished at all, and if so, to what extent.

The case study below is an example of a dilemma frequently encountered, albeit that it presents differently in different organisational contexts. In essence, it relates to an organisation being tempted to form some type of agreement or partnership with another organisation that may have a dubious identity or engage in activities that some discerning stakeholders may frown upon.

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 The ethical challenge in ‘The Donation’ case can be dissected into the following features:

  • The NGO is likely to have a set of espoused values to guide its charitable cause
  • The organisation’s governing body (Board) probably spent a considerable amount of time on discussing the challenge
  • The discussion then went to a vote that showed a lack of consensus, or extreme differences in opinion
  • You are the CEO – since the Board is a ‘hung jury’, the leadership that you may demonstrate when casting the decisive vote could reflect on your commitment to ethics or the lack of it
  • The origin of the donation could be perceived as being dubious
  • This is an ethical dilemma – irrespective of the decision eventually taken there could be negative consequences for a variety of stakeholders
  • There is a clash of (‘good’) values – doing the best for your constituents (dedication to the NGO, its employees and the women that could benefit from funds raised through the donation) but simultaneously upholding your integrity and reputation by avoiding being associated with dubious stakeholders
  • NGOs rely on donations, not only for sustainability but often for survival
  • The probable presence of a policy that requires discernment when donations and their sources are evaluated.

It may be useful to analyse an approach to this type of challenge that reflects leadership commitment to ethics. The table below is used to illustrate how nine Cs, or dimensions of leadership commitment to ethics, could manifest or be tangibly demonstrated. The nine Cs are Care, Consciousness, Competence, Conversation, Courage, Choice, Creativity, Consistency and Congruence.

Leadership commitment as applied to ‘The Donation’ case study

April clean

Out of interest: The case study was a real ethical challenge for a real organisation when it was originally posed. The NGO eventually decided not to accept the donation. They released a statement that contained the following explanation:

We do not want the perception to be created that we associate ourselves with stakeholders (donors) that may be perceived by members of the public (regardless of the number of members) as having values that may seem to contradict those values that we as NGO stand for. For the sake of transparency and accountability, we also do not condone donor anonymity.

Leadership commitment to ethics often requires a comprehensive analysis of a variety of perspectives on a challenge. This analysis and eventual course of action should ideally be based on a broad repertoire of requirements necessary to fulfil the demands of ‘leadership commitment to ethics’. This knowledge and dedication is particularly relevant when considering or even judging, at a minimum, societal tolerance of current and potential business partners in terms of their ethics and ethical reputations.