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A moral compass: a guide for leaders

May 2017  |  SPECIAL REPORT: OPERATING AN EFFECTIVE BOARD

Financier Worldwide Magazine

May 2017 Issue

May 2017 Issue


Leaders need to understand, first, that compliance and ethics are not the same. Compliance is the letter of the law and ethics is the spirit of the law. They are different although relatable – but not interchangeable. They need to complement each other. So, which comes first, the spirit of the law or the letter of the law?

Compliance is a reactive process and ethics is only a proactive process. What this means is that to be complaint is to do what the law says to do. Being compliant is a reactive choice. Ethics is a personal choice. One must choose to be ethical. One takes personal responsibility for one’s choices.

Therefore, compliance is playing by enforceable rules. Ethics is obedience to the unenforceable.

Leaders need to focus on having a moral compass. There seems to be a lack of moral courage, moral leadership and moral accountability in today’s business world.

Research points out that six moral clues point to warning signs.

When ego replaces insight. This is when a leader’s ego (not self-esteem) dictates what to do without being open to other options, opinions, and so forth. One becomes a one person ‘show’, believing that one possesses all that one needs to know to make the best possible decision on any issue. This approach is dangerous, so leaders should leave their ego at the door. To look for insights as a leader is an example of thoughtful, positive self-esteem.

When what you do is inconsistent with what you preach. People listen with their eyes, not their ears. What you do is so much important that what you say. All companies have values that leaders embrace and publicise. To advertise and promote them, and then fail to reflect those values in your behaviour, causes mistrust in business relationships.

For what do you compromise your values? This question is answered either positively or negatively. The negative might be that one would choose money, i.e. the sale over values when ‘push comes to shove’ –

odds are that might not be the right thing to do. The real compromise happens when the needs of individuals take precedence over money, or when relationships are more important than the sale. Is there a consequence for each choice? There always is. Is the leader ready, then, to accept the implications of each option?

When we look for scapegoats rather take responsibility. When leaders are in a situation where they can either admit to something or find a scapegoat to avoid dealing with the consequence of their behaviour, they should go slow and choose well. When leaders look for scapegoats, they proactively destroy their credibility, reputation and loyalty, and will not ever be trusted again to be an effective leader. The bottom line is, if the leader did it, he or she should admit it and accept the consequences. This approach will produce more goodwill with those around the leader, who work with the leader, and who rely on the leader, than trying to find a scapegoat for the leader’s actions and decisions.

Moral awareness is a proactive activity. Leaders need to be aware of and embrace their values before a decision is made so that they can make the best decision, based on what they believe, have internalised and perceive. Knowing oneself is a question of values. In business, as in life, one cannot substitute rules for values.

Being in a reactive mode will erode the ‘spirit’ and finances. To be reactive is to ‘give up’ one’s expertise, knowledge and values to someone else’s will. When leaders do this, their psyche ‘takes a hit’ because of the perception of ‘giving in’, and this is particularly the case in business dealings when discussing fees or price. Leaders should believe in themselves, their product and the benefits to their customers. When they come across that way, with those right reasons, they cannot lose.

What can leaders do to be more aware of these moral clues? Consider the rock in the pond example. No matter how big or small the rock thrown into a pond, there are ripples. The bigger the rock, the bigger the ripples. The smaller the rock, the smaller the ripples. But no matter what, there are ripples. No matter how big or small a leader’s decisions are, there ripples; or in this case, causes and effects decisionmaking. When is the best time to think about the ripples that will occur? After the leader has thrown the rock or while the leader is holding it? After a leader has made the decision and thrown the rock, it is too late. The leader is now fully accountable for the decision. If leaders are ever not sure about anything regarding their decisions, they should hold the rock and get more information, to make the best decision possible, then throw the rock, knowing they will have to take full responsibility for each and every ripple.

In terms of getting people to take responsibility for their decisions, consider these four questions: Is it legal and ethical? Will the right thing be done for the customer or client? Will it reflect the shared values of the organisation? Am I willing to take personal responsibility for the decision?

If the answer to all four questions is yes, do it. If you cannot answer all four questions with a yes, do not. Of the four questions, the most problematic question is the last one; i.e., taking personal responsibility for the decision.

The bottom line, in business, as in life, is to go slow and choose well, as there is always a price to pay.

 

Frank Bucaro is the founder of Frank C. Bucaro & Associates. He can be contacted on +1 (630) 483 2276 or by email: frank@frankbucaro.com.

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