That much is expected – arguably demanded – of leaders today is not new. Much has always been expected of leadership. What is new though is that whether leaders achieve what is expected of them is today much more visible than previously, thanks to vastly improved communication information technology.

Today the leadership terrain brings with it new fault lines - not replacing those of the past, but rather adding to them. And, like geographic fault lines, the damage and cost once they have been activated and exposed can be very high.

Achieving positive corporate results and sound stakeholder relationships for corporate leaders or delivering on election promises for public sector leaders are well recognised expectations. Failure to realise these gives rise to fault lines. But, when you or your organisation have been found to be unethical, or even when your followers and stakeholders consider you or your organisation to be unethical, you have exposed a shortcoming of serious magnitude.

If your company has being accused of collusion, or if one of your executives has been arrested for fraud, the damage can’t be corrected by cutting costs before the next set of results. Instead you will be faced with the much more difficult tasks of rebuilding your corporate reputation and brand equity, and trying to regain lost clients – assuming the disaster has not led to the closure of your business. Similarly, if you have been found to have misappropriated public funds the damage can’t be corrected by fast tracking service delivery in your constituency before the next elections. You might not be the next elected official with the opportunity to remedy the problem. In the NGO sector, unethical behaviour risks donors terminating their financial support.

This latter example, in particular, illustrates another facet which exacerbates the magnitude of the ethical fault line. The cost of unethical behaviour is not limited to the perpetrators but is often shared with many others: the NGO’s aid recipients, the rural community where the school was not built, the employees who lost their jobs when the company closed down, the pension fund members who lost their savings, the investors who lost their money. The list is endless. That totally innocent people share the cost adds to the public outrage, the publicity and the damage.

But, ethical fault lines are not only exposed when something illegal has occurred. Whether you pursue a single or triple bottom line is also a relevant factor. Businesses which still only focus on a single, economic bottom line risk censure for not also pursuing a social and environmental bottom line. The financial cost of dealing with an oil spill may be huge, but the company is unlikely to get any credit for that expense. Rather they will be judged by the environmental and the social cost, such as the erosion of the seaside residents’ livelihood. The mine that manages its costs and produces good results risks compromising that success if its operation negatively affects the local community – or doesn’t benefit them.

Producing good financial results isn't enough. Leaders now need to focus on making a contribution to environmental and social issues. Leaders who allow their organisations to only pursue a single bottom line will increasingly be seen to be unethical, to be shirking their responsibility, to be doing something wrong.

You may protest that there are companies producing great financial results without a triple bottom line focus which continue to flourish. The pertinent question is, is it a sustainable approach? Consider a few examples. Is it ok to employ child labour? Is it ok to pollute the river on which the local community depend? Is it ok to test cosmetics on animals?

While the reasons for the change to a triple bottom line can be debated at length, what isn’t open for debate is that the expectation of a triple bottom line, of businesses acting as good, responsible corporate citizens, is not a passing phase: it’s not just the flavour of the month. It is an ever increasing societal expectation – and the wise business leader will meet that expectation before it turns into a demand.

Ethical dilemmas can also expose ethical fault lines. Ethical dilemmas are not to be confused with moral temptation. The accountant who steals a gazillion rand did not face an ethical dilemma! It was a very clear right versus wrong choice. The Institute for Global Ethics has identified three key areas of right versus right situations where leaders could face an ethical dilemma:

  • short term versus long term
  • individual versus community
  • honesty versus loyalty
  • justice versus mercy.

Dealing with situations where both options present a right choice is the toughest ethical challenge you will face. Your choice will be judged by others and could give rise to fissures, if not fault lines. How will it be perceived if you are merciful to the employee who stole because of dire need? What is the future impact of that choice? The challenge of right versus right dilemmas should not be underestimated. For example, how do you manage an employee whose loyalty to a former comrade overrides honestly in his/her decision not to reveal unethical conduct?

Ethical dilemmas now also include the choices between the triple bottom lines, and these too will be increasingly challenging. How do you choose between creating employment by development if that negatively impacts the environment? Do you import the t-shirt from China to provide your customers with an affordable garment or do you produce it locally at a higher cost because you can create local employment?

Your choices in these areas should ideally be seen as a reflection of your commitment to your values and you should make the choices with the recognition that they will impact the future.

The fault lines stemming from a lack of ethics can arise from many more situations than outlined above. Following a “prevention is better than a cure” approach is certainly preferable to a “wishing and hoping” approach. This entails that you manage ethics proactively, rather than reactively, and that you manage it regularly rather than on an ad hoc basis. To do this effectively you should know your current ethical status, your ethical strengths, weaknesses and potential weaknesses, and what actions should be prioritized to improve your ethical status.

All of the above can be done via a web-based ethics survey such as the Ethics Monitor. The Ethics Monitor survey is designed to measure the ethical status of organisations and to provide in-depth results to enable focused, prioritised action in support of the proactive management of workplace ethics.

The final question is whether workplace ethics will be the destructive fault line or the success and strength that define your leadership legacy? As leadership has been widely accepted as the most influential factor shaping ethics, your choice is very important.

Cynthia Schoeman
MD, Ethics Monitoring & Management Services (Pty) Ltd

April 2011