It’s Time to Reinvigorate Big-4 CPA Firms’ Commitment to the Public Interest
Establishing Trust in Business

How to Become a Principle-Centered Leader

How to Build an Ethical Culture

Warren Bennis, known as the leadership guru, wrote a book on leadership, Learning to Lead: A Workbook on Becoming a Leader. He distinguishes between management and leadership as follows.

“There is a profound difference between management and leadership, and both are important. To manage means to bring about, to accomplish, to have charge of or responsibility for, to conduct. Leading is influencing, guiding in a direction, course, action, opinion. The distinction is crucial.” And in one of his most famous lines, he added, “Managers are people who do things right and leaders are people who do the right thing.”

An ethical workplace environment depends on a leader who establishes an ethical tone at the top, models ethical behavior, and acts ethically to carry out the strategic objectives of the organization. An ethical leader knows what the right thing to do is and won’t compromise the ethical values of the organization to achieve goals.

Stephen Covey addresses a principle-centered leadership approach to one’s personal life and organization development. He emphasizes that principled-centered leadership occurs when one’s internal values form the basis of external actions. Principle-based leaders influence the ethical actions of those in the organization by transforming their own behavior first. Covey encourages principle-centered leaders to build greater, more trusting and communicative relationships with others in the workplace.

Ethical leaders exhibit many qualities both in the character of their decisions and how they create an ethical workplace culture. Here are eight common traits of ethical leaders.

  • Establishing ethics as a priority by setting clear standards of right and wrong behavior.
  • Modeling ethical behavior by establishing an ethical tone at the top.
  • Treating others with respect and creating an environment that promotes mutual trust.
  • Seeking different perspectives to promote discussion of divergent points of view.
  • Establishing an open-door policy that supports conflict resolution.
  • Demonstrating honesty and candor in dealing with employees.
  • Encouraging, measuring and rewarding workers for making ethical decisions.
  • Providing an outlet for employees to anonymously report matters of concern.
  • Understanding the difference between following the law and making ethical decisions.
  • Accepting responsibility for one’s actions and holding employees to the same standard.

Leadership surveys indicate that competence in decision-making is an important component of what makes a good leader. Ethical leadership competence refers to the ability to handle all kinds of moral problems that may arise in an organization. It means to develop problem-solving and decision-making skills to make difficult decisions. Some leaders deal with a problem with a knee-jerk reaction, using their authority for the basis of decision making -- Systems 1.

A Systems 1 approach to decision-making is fraught with danger. An automatic response to ethical dilemmas can lead to short-sighted decisions that ignore the long-term implications of poorly-thought-out decisions. Instead, ethical leaders should act on a Systems 2 approach – deliberate, thoughtful and reflective. This is because it takes ethical reasoning to adequately consider the interests of the stakeholders, and this can’t occur without careful deliberation of the consequences of decisions and respecting the rights of others.

The Ethical Competence Scale provides a measuring stick of whether one’s values consistently direct behavior. Questions for a leader to ask include:

  • Are you reliable and dependable?
  • Are you willing to admit mistakes?
  • Are you true to your word?
  • Are you worthy of confidence?
  • Do you keep promises and commitments?

At the end of the day, ethical leaders hold themselves accountable for making choices that incorporate integrity in the workplace. Integrity is the core value that builds trust and engages employees to make responsible decisions. It is virtually impossible to build an ethical culture without integrity.

Blog posted by Steven Mintz, aka Ethics Sage, on March 22, 2017. Follow me on Twitter“Like” my Facebook page.