Ethical Leadership and How it Mitigates Risk

Problems are inevitable. Crises aren’t.

The best way to prevent problems from escalating into a crisis?  Ethical Leadership; it is one of the most effective risk mitigation strategies.

Ethical leadership draws on a high level of emotional intelligence (EQ) and the capacity to own an organization’s values as well as one’s own, linking  the means and the end in business strategy.

On one hand, it involves listening to multiple points of view; on the other, it encourages receiving input and feedback.  Rather than “killing the messenger” bringing bad news, the leader, working with his or her team, sees how problems can be mitigated before they spiral into a crisis.

As I’ve indicated in other columns, it is critical for leaders to raise questions about the potential ethical implications of a decision, the same way they ask about potential legal implications. And in doing so, a fundamental question requiring an answer becomes “what if we are wrong… and the mine does explode, the well does erupt, human error isn’t causing these car crashes, and our customers are harmed by our offering a product that bets against what we just sold them.”

Ethical leadership isn’t a mystical mantra for do-gooders. It is an attitude, a set of beliefs and behaviors that guide how a leader leads. Companies are put at risk, according to an Ethics Resource Center report, when leaders fail to see that ethical leadership is a vital component of effective and responsible management.

I gave a talk yesterday to about 150 civic and community leaders on building trust and reputation and how it relates to practicing ethical leadership. When I said that most everyone believes they are ethical, heads around the room nodded in agreement. But, I added, the problem with that assumption is if we think it is a static assurance that we will continually make ethical decisions. We won’t. Not without the ongoing awareness of what we are doing and actions that match our intentions.

I quoted John Darley, a psychology professor at Princeton, who  said in an interview with Margaret Heffernan for her book Willful Blindness: “In very competitive environments, where you’re under a lot of stress…you won’t necessarily even see there is a moral consideration.”

I’ve written a lot lately in this column and for Business Ethics Magazine about the research done by Heffernan, Kathryn Schulz (on being wrong) and The Arbinger Institute’s work on self deception because these all-too-human challenges greatly undermine a leader’s ability to be effective.

These vulnerabilities are far less likely to derail a leader whose style is ethical leadership — who makes it safe to disagree with him or her; voices company values in making decisions; and has high EQ that is brought into how he or she resolves conflict, communicates transparently  does frequent reality checks with people of multiple points of view, leads in a culture of constructive accountability, and sees ethics as a business strategy where the impact on society is factored into how they do business.

A year ago I contributed to an anthology of strategies on mastering business, life and relationships, called Stepping Stones to Success.  My contribution was stories about leaders demonstrating ethical leadership (and those who haven’t) and recommendations for what leaders can do to minimize the potential for ethical lapses.

I end this column with a statement I made in the book:

“…striving to be an ethical leader is about fully coming into your own as a trustworthy person, connected to your core beliefs and acting out of them. You are in a rhythm that is congruent, not conflicted.

“The term ‘ethical leader’ sets you up for success because it is about deciding how you want to show up in the world and what you need to do to support yourself and gain support from others in achieving goals and making a difference.”

Gael O’Brien,    May 12, 2011

 The Week in Ethics

Gael O’Brien is also a columnist for Business Ethics Magazine

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One Comment on “Ethical Leadership and How it Mitigates Risk”

  1. Ethics Sage Says:

    Gael,

    This is a critical topic for business schools at a time when corporate America seems more concerned with their own self-interests rather than improving the quality of life in society. You may be interested in my blog on: Business Schools Failing to Teach Ethical Leadership (http://bit.ly/jQR4N5.


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