Ethical Leadership: It’s About The Way You Like To Treat People

Never doubt that a small group of thoughtful committed citizens can change the world; indeed, it’s the only thing that ever has”. Being a bit of a historian, I realized that anthropologist, Margaret Mead was right! Whether it is about changing the world for good or for evil, it requires only a small group of committed individuals… and I know that you (the Rotary Club of Bombay) are that small group! I’m aware of some of the things that you’ll are doing to change the world for the better, and I’m very impressed and thrilled, as I know that this statement is true!

From my recently published book, the Business Ethics Field Guide – written along with Aaron Miller, a colleague from Brigham Young University and Bill Rourke, a wonderful retired executive from Alcore Corporation – my first message on ethical leadership is that, If one wants to be great at something, no matter what it is, intensions are not enough; you have to work at it. Skill building is necessary as well. For instance, if you were given the opportunity to represent India at the next Olympics, say in gymnastics, you’d probably think I have a lot of work to do. I have a lot of skills to develop, a lot of training to go through. Therefore, if one wants to be a leader, there are two things that a leader needs to do. This is based on a wonderful article written by Abraham Zaleznik in Harvard Business Review, in which he talked about leadership vs. management, and how both functions are critical for a good organisation. He further states that as a leader of an organisation, you don’t have to have both the qualities, if you have both it would be wonderful, but most people have only one.

Therefore, if you have one, you can find someone who can complement you with the other. However, both functions are critical for an organisation to succeed. The first one is leadership. Leadership is about creating a vision for future. For example, if you want the people to work hard and get to a destination, they have to know where the destination is. So the job of a leader is to make that destination very clear, and make it into a destination that people really want to get to. The leader has to create a vision of what the organisation is trying to do, and do it in a way that is motivating to people and creates change.

Management, on the other hand, is about creating stability. And in order to have a stable organisation, you need to have someone to manage the budgets, control systems as well as schedules. And so management is also critical. However, there is a third skill that we don’t nearly focus enough upon, that needs to be developed, i.e. the ability to identify the values of your organisation, and also to deal with situations where there are value conflicts – because they happen often, almost everyday! And while most of my students don’t appreciate it while its taught in class, but once they are in business, they realise how important it is to be able to handle such situations.

Like life, business too is a wonderful adventure. It has beautiful vistas. However when we go out on adventures there also dangers. You need someone to guide you through some of those challenges. You need a survival guide. In my research and while teaching executive MBAs, I’ve looked at the kinds of dilemmas that people face in business, and have classified them into 13 fundamental ethical dilemmas, providing guidance on each of those in my book. They are as follows:

1. Being asked or told by someone in a power relation to you to do something unethical – This by far the most common

2. Deciding how to act in a situation where the interests of two roles you occupy, are in conflict with one another – i.e. a conflict of interest issue

3. Having suspicions of wrongdoing without enough evidence.

4. You make a promise of some sort, and the world changes relative to that promise.

5. You are somehow tangentially involved or see something unethical occurring in your organisation – Should you intervene and try to stop it?

6. Sometimes your job requires you to sacrifice personal values that are not general to the public – So when should you sacrifice those values and when should you never give up?

7. You’ve done something, or are accountable for something wrong now what do you do? – Repair.

8. You or your competitor has an unfair advantage

9. Organisational rules sometimes get in the way of you doing ethical things! – When is it appropriate to break a rule?

10. Deciding when to provide mercy.

11. Using questionable means to bring about justice – Sometimes, there is no right and wrong; it is only wrong, and the question is which one is less wrong. War is a good example of that.

12. Deciding when it is appropriate to dissemble or not share information – Allowing someone to continue with an unfounded understanding.

13. Deciding how much loyalty to give – While loyalty is a good thing, it can only be taken to a certain level after which we should not be loyal. In my book, Bill Rourke talks about the importance of being loyal to principles as opposed to being loyal to people. One of the ways to build your skills in ethical behaviour is to look at the problem and try to identify which of the 13 classifications it belongs to. This is because once you can identify what kind of principle, it will be easier to find a solution.

For instance, several years ago, I received a large package of Omaha steaks packed in dried ice from Dow Jones Company just before Christmas. And the reason why I received those was because, Dow Jones (then) owned the Wall Street Journal, and since I was the Kats School Liaison with them, and also the person responsible for deciding which newspaper to be bought for the faculty and the students. So was I spending my money? No, I was spending the school’s money. I could have chosen the Financial Times, The Economist, or the Business Week, but I chose the Wall Street Journal as I thought they were the best. So which of the 13, ethical dilemmas is this?

This is a conflict of interest, as I’m playing two roles, i.e. the role of Brad Agle who likes steaks, and that of Dr. Agle, whose job is to be objective in spending University of Pittsburg’s money on choosing the right publication. The reason why it categorises as conflict of interest is because I do not want anybody to think I was working for the benefit of my personal interest.

So one of the measures that we use on conflict of interest is that, if this incident is revealed on the news and I ate all the steaks, next year when I chose which publication, would anyone wonder that I chose the Wall Street Journal because it was the best, or because they sent me steaks. I never want anyone questioning my integrity. Conflict of interest is one of the opportunities for you to set a higher bar. I’ve had a lot of people arguing with me on this one saying that they are just steaks, not a big deal. But if you want to be an ethical exemplar, you cannot do what everyone else does. You have to set a higher bar for yourself, and so the steaks went to the food bank. Then I sent a letter to Dow Jones requesting them not to send me anymore gifts, and that I would choose the best, and so if they continued to make Wall Street Journal the best publication, I would continue to buy it.

Thus, there are many things that you can do to become an ethical leader. However, to develop a reputation as an ethical and honest person, you must:
Work diligently at your job: The most ethical obligation you have at work is to do the job for which you were hired. There’s no way you can be an ethical exemplar, if you do not even do what you’re hired to do.

Make sure that your activities are seen so for the benefit of others: Most of us know that when we go to work it is to get a paycheque or earn money. However, with some people, you will realise that it’s the only reason they are there. So, if you develop a reputation, wherein you are not only out for yourself but care about others as well, then that reputation will protect you when you make a mistake. This is because, we all make mistakes sometime. Whereas, if you have a reputation as someone who’s only out for himself, people will say, they did that ‘cos they are only out for themselves.

Without being self-righteous, be the person that people know, who cares about the subject: Be the person who reads about the wonderful things done by the company or the code of ethics and encourages others to do so without being self-righteous. Creating such a reputation will enable people seek your guidance, because you are the person who can lead them by identify the ethical issues. Learning a little bit can make you an expert in an area which people have no expertise at all. If you do that much work, you can become the field guide for other people.

Q & A
Rtn Ashok Jatia: In your example of the steaks, would it be a better idea, if I would have made my wife happy, ate the steaks and then elected for the financial times?

Dr. Agle: There’s a part of the story that I have to tell you. To keep peace at home, I did slip out one steak for my wife.

This is an area, which can be difficult, but not always. Certain skills can developed only by learning specific skills. That way, things that we used to say ‘that’s OK’, would now be ‘well, now that I have a better understanding, I should do them differently’.

Rtn. Nandan Malushte: I recently met someone from the US intelligence community, and he mentioned that the most successful people in business, especially post MBA, had one of the three ‘M’s before the joined the MBA course – the three M’s being Military, McKinsey or Mormon. I found it intriguing as I felt the military was relevant, as it matured you, it may be put you through leadership opportunities and so on and so forth. And similarly, one could think about what McKinsey might do for you. But I’m wondering about the Mormons, and since you are from Brigham Young University, and a chair donated after a Mormon. Is it that having an ethical framework makes you a successful businessperson in the long run?

Dr. Agle: I love that question. It’s a difficult one, as we have examples all around us of people who’ve actually been unethical in business and who have become successful, and there are lots of those. So if all you’re interested in is business success, it is possible to do it through unethical means, but it’s also possible to do it through ethical means!

A lot of people think that anytime anyone made a fortune, someone committed a crime. I don’t believe that. I can give you loads of examples of ethical people who’ve done very well in business. So is it possible to be ethic and successful? Absolutely! Is it possible to be unethical and successful in business? Absolutely! So more importantly, it’s all about whether you want to be ethical or not, because it’s a choice. However, research shows that being ethical is a little more effective, and successful in business than being unethical, but not by a lot. I choose to be ethical. So what is ethics about anyways? It is about the way we treat other people! That’s fundamentally what ethics is. So would you rather treat people right or treat them wrong?

At the end of the day, you have to decide where you’d like to be – most people would obviously like to be ethical and successful. The question you would have to ask is, would you rather like to be ethical and unsuccessful or unethical and successful. That is where the real line needs to be drawn.

Finally, the biggest benefit of ethical behaviour is that those who live by ethical principles and are true to their values, have much better health. Therefore, I wish you the same blessings that I have in my life!