Ethics and Corporate Leadership
by Miki SaxonConsidering the intense focus on corporate values, ethics, and social responsibility, I found the interview with Lynn Sharp Paine, the John G. McLean Professor at Harvard Business School, along with the excerpt from her new book, both timely and thought provoking.Accounting scandals, stock option backdating and the increasing demands of a highly educated workforce for more social responsibility are driving the trend, but it’s not a new idea.
“Noting a seeming shift in public opinion, a leading U.S. legal theorist speculated in 1932, “…a sense of social responsibility toward employees, consumers, and the general public [might someday] come to be regarded as the appropriate attitude to be adopted by those who are engaged in business.”
According to the Millennium Poll on Corporate Social Responsibility, a 1999 survey of more than 25,000 individuals across twenty-three countries on six continents, two in three people say that companies should go beyond their traditional functions of making a profit, paying taxes, creating jobs, and obeying the law. In addition, respondents said, companies should also try to set a higher ethical standard and contribute to broader societal goals. In other words, companies should achieve profitability in ways that help build a better society. In all but three of the countries surveyed, 50 percent or more of those surveyed took this position…August 2000 survey in the United States. 2 Some 95 percent of these respondents said that companies should sometimes forgo some profit for the sake of making things better for their workers and communities.
Indeed, as the size and importance of corporations have increased, so has the general propensity to view their activities through a moral lens.
Excerpt from Value Shift: Why Companies Must Merge Social and Financial Imperatives to Achieve Superior Performance, McGraw-Hill, 2002
For those in, or who aspire to, leadership roles, this is about more than keeping your legal department happy or even focusing on the spirit, not just the letter, of the law,
“More managers are waking up to the ways in which positive values contribute to a company’s effective day-to-day functioning, as well as its reputation and long-term sustainability.”
Q: Having a positive value system in place can help contain costs by heading off trouble. But can improved values also add to the bottom line?
A: I’ve alluded to some of the ways positive values can add to the bottom line. And research points to others that I discuss in the book-better access to talent, enhanced employee commitment, better information sharing, greater creativity, enhanced reputation, and so on…But I caution managers against focusing only on the financial case for values…
What’s important to recognize, as I argue in the book, is that today’s companies are being held to a higher standard. Financial results are a must, but in addition, leading companies are expected to achieve those results by acting in an ethically acceptable manner. This represents a dramatic departure from centuries of tradition holding that corporations are by nature amoral and thus incapable of assuming responsibility, adhering to ethical standards, or exercising moral judgment. But abundant evidence shows that companies today are expected to do all these things…
This shift in our understanding of the corporate personality has profound implications for management. Among other things, it means that managers must develop more robust ethical reasoning skills and increasingly subject their decisions to ethical as well as financial analysis…
You should also be awake to the fact that this is the path to your own career success—whether continued or to come. Just as business is being held to a higher standard, so are its leaders.
If you want to be the person that people look up to, listen to and follow; whose suggestions carry weight and who comes to mind when a promotion or career-making project is being staffed, then remember that people aren’t stupid, so you need to embrace, walk and work by the values you talk.
Read the full interview by Carla Tishler.
August 29th, 2007 at 1:44 pm
[…] Sounds right, but all four attitudes-transparency, authenticity, concealment and dishonesty-are still situational, based on the society and time in which they’re happening. According to Lynn Sharp Paine, the John G. McLean Professor at Harvard Business School, “Indeed, as the size and importance of corporations have increased, so has the general propensity to view their activities through a moral lens.” (See post) […]