What Executive Leaders can do to Conduct Themselves and Their Organizations More Ethically
If the news is an accurate gauge of the severity and frequency of CEO and organizational misconduct, then that dysfunction is at least semi regular.
Not all of it is scandalous and external crisis. Yes, that certainly is a problem but a truism is the majority of significant problems don’t make it to the media. Employees view, experience, endure and suffer these issues though.
“Decisions and deals are often made to keep the stock price and the value of the company ever-rising as the priority…while ignoring creating a strong and healthy corporate culture that supports its people,” says Leslie Austin, Ph.D., founder of Austin Consulting, a consultancy that shows leaders how to make values-based high-road decisions.
“Ultimately it is not possible to endlessly keep increasing profits year to year, at some point uncontained growth becomes destructive. The intense pressure that this short-sighted focus has on only profits pushes senior executives into unethical, often reckless behavior if they are to succeed by those metrics,” Austin says.
Organizational leadership — a CEO, their management team and a board, if there is one, must know what exactly, precisely it wants with ethics in their culture, how it will monitor and accomplish it, what it will tolerate and what it will promptly, ethically, successfully correct.
“If the vision and the supervision and management of an organization is not made explicitly clear and directly enforced, focused on how business is conducted, it’s very easy for executives to start cutting corners in small ways and end up with crooked, sometimes illegal deals,” Austin says.
Boards must learn to be more effective in assuring ethical practices, the consistency of them and developing the environment that drives the culture goals, to where any leadership impropriety is so rare that it becomes infinitesimal.
“Corporate culture and tone at the top are considered key drivers of ethical behavior, but boards of directors often devote little time to the topic,” Sabine Vollmer has written.
That error of omission is compounded by the fact that directors might not be sure what to look for or do they always, fully understand what they are seeing.
“I don’t think directors are particularly well-versed in recognizing red flags,” says Pat Harned, CEO of the Ethics and Compliance Initiative, a U.S. think tank.
Boards must lead and not falsely assume the CEO is fully willing and committed to conducting daily practices with ethics or that they and their team will meet the highest standards of expectations.
“Board members as individuals and as a group must be the role models for the rest of their organization,” Austin says. “They must be clear about their cultural expectations for how they want their people to do business and how they want them to represent the company to the outside world.”
How this is best done can seem abstract and confusing. While there is complexity, the commitment to be ethical as individuals and as a collective should not prove to be perplexing.
“It’s not enough for Board members to talk a good talk, they must walk their walk as well, every day, in detail,” Austin says.
“Detail.” Success in most all endeavors requires that focus and attention to the small parts that make up the whole.
“Lastly, they must be committed to not hesitating to intervene when they see wrong behavior, no matter how seemingly small and even at the cost of short-term profits,” Austin asserts. “The long-term cost of questionable behavior and deals can be much more expensive and destructive.”
How to Prevent Your Star Performer from Destroying Your Company is information and a talk Austin gives that addresses some of the worst in leadership behavior.
“The benefits from my work are clear,” she says, adding, “(organizations) can support their star performers’ positive skills and effectiveness while supporting them through coaching to learn to change their domineering, micromanaging, bullying, morale-busting behaviors.”
These extreme behaviors and the psychology that act as the catalyst for them can be arduous to successfully address and overcome yet they are emergencies that need to be promptly, constantly and fully addressed. Currently, they are aren’t often identified, worked on, improved and corrected.
“When the leader is toxic and that leader is me.”
Governance and Compliance Expert
Founder of Speak Up at Work
“People with narcissistic tendencies can make the best leaders if they are willing to learn to be more self-aware and to manage their behaviors more strategically and wisely,” Austin says.
If they learn the ‘how’ and ‘why,’ she says, people with this trait and behavior can get more of at least one reward what appeals to them: status.
“They can be a bigger, better star performer, become a true team leader and not a lone wolf, and everyone they work with will benefit too. This one change in a star performer has the potential to turn a struggling company around in the right circumstances,” Austin has discovered.
Many if not most narcissistic individuals (and organizations) have no compunction to improve on how they see the world and other people and adjust their viewpoints, default behaviors, self-centered impulses and decisions. Austin says however that some narcissistic leaders are receptive to personal and professional development.
“I am a very experienced executive coach and have specialized over the years in working with narcissistic senior executives about to get in serious trouble, those rare ones who want to improve themselves and the people who either are the narcissist’s boss or subordinates, who have to live with their behavior. My clients have affectionately referred to me as ‘The Lion Tamer’ for my work,” she says.
When troubling executive thinking, behavior and habits are the issue, human resources are not the people with who Austin has worked. It’s the CEO themselves, a board member or other senior executive that she has been hired by or coaches.
“In most cases, HR is not empowered to enforce any repercussions on senior players for bad behavior. In every situation I have worked on, it is always the top executives and-or the board members who own ultimate responsibility for allowing destructive behaviors to continue…” Austin says.
Self awareness, emotional regulation, social awareness and empathy, or better yet, compassion are not soft skills despite what the world says. They are instead critical skills, hard ones if you will, that differentiate and elevate leadership quality and effectiveness.
These skills and traits also help manage risk for executives, the team and organization — internally with employees as well as with the board. It also proves beneficial to the organizational name, its reputation, investors, in the media and with public relations, marketing and sales.
Executives and boards help themselves when high-level ethics are clearly known and practiced consistently and oversight and safeguards are present for individuals and the organization.
When prompt, thorough, corrective, protective measures are applied to concerns and problems early, risk management is being conducted successfully in response to poor ethics, behavioral dysfunction and corruption.
Michael Toebe is a specialist who helps individuals and organizations accurately evaluate and wisely respond to reputation crisis and scandal. He writes Red Diamonds Essays and Reputation Specialist Essays (both on the Medium platform) and contributes analysis and advisory for: Chief Executive, Corporate Board Member, New York Law Journal, Physicians Practice and Corporate Compliance Insights. He is the voice of the Red Diamonds Podcast.