The Ethics Prism: beyond the hero & villain model of ethical leadership

At the core of the ethical behaviour of leaders are values – the very personal values held by the leader and their advocacy of those values for the organisation they lead.

We all advocate honesty as a value in all of our intentional dealings with others. However whether we face the ‘big’ or ‘small’ tests of leadership, there are moments we can all admit to when we were not completely honest in what we said or did.  Of course we all had good reason – we did not want to lose the client, we did not want to worry the board, we did not want the analysts to over-react, we did not want to destabilise the company’s highest revenue generator. At an organisational level, these tests are more complex for example in valuing or prioritising shareholder value over stakeholder concerns. These bigger tests are more difficult to pin on a single leader and are often counted and rationalised away as structural or systemic values dilemmas.  But all lead down the same path – unethical behaviour by one or more leaders.

Unethical behaviour occurs when an individual is faced with a fork in the road and the consequent dilemma, and chooses one of 2 paths. The dilemma may be between ‘right’ and ‘wrong’ (2 values come into direct conflict) or between ‘right’ and ‘right’ (when 2 values have to be assigned priorities and one take precedence over the other). What is deemed right or wrong however is rooted deeply in what one personally values or values more – one’s personal value system.  But more importantly, when the chosen path is unethical, values held either by the individual, the company or the business community have been distorted in some way.  Distorted because a leader ultimately accountable did not show the moral courage (or was unwilling) to endure the hardship that results from the ‘tougher’ of the 2 paths.

An example of a scenario where a choice is made between the right and wrong is when an individual or company operates with a ‘win at all costs’ mentality. Whole competitive systems are distorted – as true of drug cheats in sports who want to win at all costs as it is of principal dancers in the Russian Ballet as it is of large listed companies who choose to use their monopolistic power to squeeze out other competitors. This of course is true anywhere in the world. Any culture in the world can grow the ‘win at all costs’ mentality. These kinds of dilemmas are easy to spot.

The choice between right and right, although tougher to navigate through is now easier to spot than before. As the Agency Theory of Corporations comes under greater scrutiny (following the GFC) and the language of ‘stakeholder’ enters the business lexicon (multiple stakeholders always existed, it’s just that some organisations chose not to prioritise them), some progressive companies are beginning to  systematically consider the different priorities and value systems that different stakeholder groups come to the table with. These companies find a way to ensure and preserve the very fine and on-going balance between the priorities and values of all, preserving the delicate ‘systems’ equilibrium in that broader community of stakeholders.

Ethical behaviour demands a fine balance between competing values or paradoxes that are an inherent part of doing business today.  Ethical leaders are those that truly understand and work to find this delicate balance.

If we turn our attention to operating cross nationally or cross culturally, we add another layer of complexity to the ethical leader’s job. There is no western educated or trained business person who steps off the plane in an Asian country and has not noticed how different things are. How more relaxed some things are (compared to their home country) and how much tighter some other things are (compared to their home country).  All reflections of what are valued and what is not.

But taking that prism into boardrooms you recognise a number of common values dilemmas that leaders for example from Anglo-Saxon countries who find themselves in Asia are tested by:

1)      Long term vs. short term

2)      Justice/fairness vs. mercy/compassion

3)      Self vs. others (individual vs. community – however community is defined)

4)      Truth vs. loyalty/honour

5)      Task vs. relationship

All of these dilemmas if viewed through the prism of culture will take on a different meaning.  For example, in Confucian cultures, leaders are likely to take a longer term view of business. The narrative here goes something like this “as long as we don’t lose money we will stay in this market because we believe in its longer term potential”. Their anxiety at not seeing profit in the first year is not evident, even if present.  In Anglo Saxon cultures on the other hand, gripped by NPV or the time based value of money, the need to see a return in the short term dictates not only investing behaviour but leader behaviour.

But before we typecast these as East-West scenarios, even in the western world, privately owned companies take a much longer term view than publicly listed companies that tend to be driven by half yearly or quarterly reporting cycles.

Reflecting on the other values dilemmas listed above, in a similar way Asian cultures operate on relationship trust where honour, loyalty to the community and clan matters more than responsibility to the market. Where compassion matters more than equity or justice and so on. This contrasts with cultures (generally Anglo-Saxon) where contractual trust and the equal application of the law (often referred to as the rule of law) is seen to be the more defensible way of doing business. In Asian cultures where trust and honour is a form of self-regulating justice, if you are part of the clan or community you will be treated justly and fairly but not if you are not.  Western leaders who have invested heavily in building long standing trusting relationships in Asia have been able to draw on this legacy of trust to their commercial advantage. Companies, steeped in the Western tradition of ‘contractual trust’ (evidenced by how quickly the lawyers are wheeled into the room during contract negotiations) end up incurring expensive legal litigation fees when operating in regions outside their own.

But before we assume this need for cross cultural fluency might only be relevant for companies operating globally, even companies with domestic customers may need to consider a new way of thinking about the diversity of value systems. This is because even companies who sell their products and services domestically may increasingly have overseas suppliers and overseas competitors whose value systems they would need to better understand.

In operating cross culturally it is imperative that leaders develop a deeper cultural fluency not only in different business models or regulatory systems, but in different value systems – becoming more adept at using the values prism.  In other words it is important for the leader to not pre-judge the governance or ethics frameworks in other countries without truly understanding the values that underpin it.  The leader does not have to accept those values as theirs, but will need to understand how they differ if they are to successfully navigate different frameworks in their host countries.

At risk of simplifying the reality, perhaps there is a case for building a globally relevant ethical framework that builds on a universal set of values. This can be done by acknowledging that the Anglo-Saxon leader can learn from what the Asian leader is best at – bringing the sense of trust and sense of citizenship back into the ethical debate.  Just as Asian leaders on the other hand will benefit from balancing the values of honour and face with a level of transparency and openness as they grow their businesses in increasingly globalised markets.  Rather than the current binary ethics debates that centre around heroes and villains, it would be more useful for leaders to adopt a more considered, nuanced and values driven approach to the code of ethics and the practice of that code. Central to this view of ethical leadership in cross cultural settings, is the notion of Universal Values. Is such a notion possible or even desirable? Are there a set of Universal Values that combines the best of the East and West to shape the way business is done ethically in the 21st Century?

Let’s move away from the binary ‘heroes & villains’ model of ethical leadership and reframe the conversation about how we promote ethics in an increasingly complex and interconnected world.

For more on how to develop the skills of your leaders to navigate values dilemmas and embed ethical leadership, contact meena@talentinvest.com.au