Reputation Matters: How Ethical Leadership Enhances Business Standing

Ethical leadership does not normally have the shock factors that generate front page new. However, it often transcends pricing discussion and makes it easier for a buyer to say yes. The leader of a company inspires the attitude to responsible leadership and encourages a company’s reputation, which can often be the difference between success and failure.

Ethical leadership plays a crucial role in establishing and maintaining this reputation. Businesses that prioritise ethics in leadership not only reap rewards in terms of loyalty, trust, and long-term success but also set themselves apart in competitive markets. So what can we do, as supporters of doing good business, to help companies and organisations prosper.

We find that leaders that demonstrate consistency in decision making, and operate with values such as honesty, integrity, fairness, accountability, and respect, command higher respect. It is the conscious decisions that these companies and leaders take that attracts like minded companies.

When a company consistently exhibits ethical behavior, it fosters trust among stakeholders, including customers, employees, investors, and the community. Stakeholders are more likely to support and engage with a company they believe operates with integrity. Ethical leadership helps prevent scandals and crises that can damage a company’s reputation and erode stakeholder trust. This proactive approach to ethical behavior can prevent legal issues, minimising risk, and enhancing the overall standing of the business.

Is that enough?

Case Studies promoting ethical leadership

Let’s consider three example case studies of companies that demonstrate ethical leadership.

  • Patagonia. Known for its environmental and ethical consciousness, Patagonia has built a strong brand around sustainability and social responsibility. The company’s commitment to these values has attracted a loyal customer base and garnered widespread respect in the industry.
  • Ben & Jerry’s, the ice cream company that integrates social justice into its business model. Ben & Jerry’s has a long history of advocacy for social and environmental causes, and this commitment has significantly boosted its reputation. Customers appreciate the company’s dedication to making a positive impact, leading to a strong, loyal following.
  • Starbucks is also well-regarded for its ethical leadership practices. The company’s efforts to source ethically produced coffee and its focus on employee benefits, community involvement, and environmental sustainability have helped it gain a positive reputation. These efforts underscore Starbucks’ commitment to ethical principles, which has contributed to its global success.

As a leader, where can we start? What quick actions or changes in the way that we work can sharpen our conscious credentials?

My MBA experience – the ethical leader

When I was completing my MBA at Aston University a few years ago, I fondly remember a lecture that was given by Sir Adrian Cadbury. He was 80 when he delivered this lecture, but you could understand the passion that he had for doing good business and the passion that he had about doing it right. His report concluded that public boards should be accountable, specifically –

  1. posts of chairman and chief executive should normally be kept separate, and
  2. that boards should contain non-executive directors of sufficient calibre and number to carry significant weight in a public company’s decisions.

Through his tenure through Cadburys (the chocolate brand), he led by example. He demonstrated high levels of integrity, honesty, and fairness in all his actions and this set a standard for others to follow. He told a story of a difficult time when he had to convey a challenging picture to the chocolate makers workforce. Instead of cascading through leadership, he addressed the organisation as one and in person. Being as transparent and as open as he could, encouraged openess and helped to address ethical issues promptly.

Introducing behavioural measurement promoted ethical leadership

I remember a time when I was leading a team that introduced behavioural measures into the annual review process. As we shared our ‘desired behaviour’ template, this encouraged conversation and raised the bar. We were clear in our intention as a leadership team, and demonstrated our commitment to openess by empowering our people. We formed small groups to empower individuals to solve some of the challenging problems that we had – which included manual handling injuries and driving awareness. We saw the ethical standards in our business improve and with it, our business performance.

Lencioni – your starter for high performance

A few years ago, we were designing a leadership programme. In this programme, we were looking for a model to work with the leadership group. Sure, lots of diagnostics exist – but the simple 15 questions that Patrick Lencioni introduced us to in his seminal book, ‘the 5 dysfunctions of a leader’, was embedded. By thinking of the organisation through a high performance lens of trust, accountability, results, ability to challenge and commit became the performance language of choice. We all understood the objectives and again we saw performance improvement.

Of course, specific initiatives are required for specific situations. However, the elements of being conscious around integrity, trust and openess always prevail. How they are acted out in an organisation depends on the organisation and the way it is showing up. Sometimes, it is obvious – othertimes it is tricky and more involved. However, in both cases transparent and ethical leadership should not be something that we opt in to, it should be a way that we do business.

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