1. ethikos January/February 2017 15
Character is at the core of leadership
BY JYOTI PANDEY
W
e have people in leadership roles in many walks of
life. There are people who lead us in politics, busi-
ness, small to big organizations, community, and so
on and so forth. As we watch those in positions of leadership
talk about strategies and goals for the future and their agenda
as they relate to their ideologies, what is it that we are mostly
inspired by? Their agenda, their vision, their unique communi-
cation style, their standpoints, or their analytical skills? As we
think more about it, we realize that the most inspiring trait in a
leader is character.
So what is leadership character, and how do we build it?
The dictionary definition of character is “the mental and moral
qualities distinctive to an individual.” Notice that the defini-
tion didn’t talk about technical competencies. It talks about the
moral qualities that can provide guidance and a sense of direc-
tion when things don’t look so promising. Whether heading a
team, a department, a company, or, on a larger scale, a country,
leaders share some key attributes. The graphic on the next page
(Principal Traits of Leadership) exhibits key attributes converging
to character at the core.
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2. 16 January/February 2017 ethikos
Why are ethics and strong character the
most important attribute in leadership?
As the former SEC Chairman, Richard
Breeden, wrote: “It is not an adequate ethi-
cal standard to aspire to get through the day
without being indicted.”1
Ethical leadership will implore workers to
do the right thing. The leadership will foster
an environment of trust and social corporate
responsibility. Once people think that their
voices count and they are respected as indi-
viduals for their contributions, there will be
more transparency and ethical undertone in
their behavior. It is helpful to work toward a
culture where people can voice their thoughts
without any fear of retaliation. The tone at the
top and an ethical leadership influence the
organization in a way that goes beyond any
written rules.
In the current business atmosphere when
some of the businesses faced an erosion of
trust by people, a further research and deep
analysis to possibly understand the causes and
remedy the situation suggest that we need to
work around eight basic tenets of leadership
(mentioned above) to foster a culture of ethics
and values. Following are certain steps we can
take to work toward that objective.
Figure 1. Principal Traits of Leadership
CHARACTER
INTEGRITY
AUTHENTICITY
LISTENING
ABILITY
TONE OF THE
LANGUAGE
EMOTIONAL
INTELLIGENCE
CONFIDENCE POSITIVE
OUTLOOK
SHARED
VISION
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3. ethikos January/February 2017 17
Foster a meaningful culture and value:
Without a shared set of values and guiding
principles deeply ingrained throughout the orga-
nization, it is hard to incorporate a meaningful
culture of ethics. According to a study by Cone
Communications and Echo Research Group,
82 percent of U.S. consumers consider cor-
porate social responsibility when deciding
which products or services to buy and where
to shop.2
Successful companies such as LEGO
and Whole Foods Market stand behind their
organizational values. Chipotle, stuck to its
values, despite the risk of losing business over
a carnitas shortage in January of 2015. When
the company discovered that a major pork
supplier had violated its standards, Chipotle
pulled carnitas from the menu until it found
a solution. No company wants to disappoint
customers on a large scale, but Chipotle used
the problem as an opportunity to showcase
its values, earning respect and loyalty in the
long run.3
Doing the right thing has to be a deeply
ingrained part of a company’s DNA. Ethical
training should not be a once a year program.
It has been observed that the companies that
are conscious of their social responsibility add
significantly to their bottom line in a positive
way. Besides, fostering a culture of staying
true to its values earns widespread support
from its employees as well. The following
figure (Figure 2. Impact of Factors beyond Salary
on Employee Satisfaction) demonstrates what
employees value the most in an organization.
Figure 2. Impact of Factors beyond Salary on Employee Satisfaction
0% 4% 8% 12% 16% 20% 24%
Business Outlook
Contribution to Overall SatisfactionSource: Glassdoor Economic Research
Compensation & Benefits
Work-Life Balance
Senior Leadership
Career Opportunities
Culture & Values
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4. 18 January/February 2017 ethikos
Think beyond short term profit:
“The more men value money-making, the less they value virtue,” Socrates wrote. Profit motive
in businesses, although essential for sustainability, can be shortsighted and limiting if not taken
in with bigger picture in view. That further impacts the overall culture of the organization.
Recall the unethical decision driven by the profit motive of recent debacle of General Motors.
The disastrous consequences of ill-conceived goals appear in figure 3 below.
The sentiment that the top management
endorses percolates down to the bottom
potentially creating a culture of fear and
deceit. While we focus on the bottom line, we
need to remind ourselves that the quality of
each line leading to the bottom line is equally
important. It is not just enough to make
money, it is also important to be forthcoming
about how we make money. One can’t create
an ethical culture if employees and other
stakeholders perceive the company to be unfair
in its business dealings, or if they believe the
company does not value or safeguard human
lives. An ethical culture cannot be created if
unethical behavior is not questioned. Therefore
the first step in positively influencing employee
behavior must come from top management.
Regardless of the business one is operating in,
if the underlying belief is merely one of profit
at whatever cost, without any conscience for
the contribution towards building a better
future for those we are serving, resorting to
unethical practices is easy, even if legal.
In the current climate of a demand for
transparency and accountability, some com-
panies are taking great initiatives and putting
a great deal of energy into efforts to improve
their ethical environment—installing codes of
ethics, ethics training, compliance programs,
and in-house watchdogs. Such initiatives,
ILL-CONCEIVED
GOALS
MOTIVATED
BLINDNESS
INDIRECT
BLINDNESS
THE SLIPPERY
SLOPE
OVERVALUING
OUTCOMES
DESCRIPTION
We set goals and
incentives to promote a
desired behavior, but they
encourage a negative
one.
We overlook the
unethical behavior
of others when it’s in
our interest to remain
ignorant.
We hold others less
accountable for unethical
behavior when it’s
carried out through third
parties.
We are less able to
see others’ unethical
behavior when it
develops gradually.
We give a pass to
unethical behavior if the
outcome is good.
EXAMPLE
The pressure to maximize
billable hours in
accounting, consulting,
and law firms leads to
unconscious padding.
Baseball officials
failed to notice they’d
created conditions that
encouraged steroid use.
A drug company deflects
attention from a price
increase by selling rights
to another company,
which imposes the
increase.
Auditors may be more
likely to accept a client
firm’s questionable
financial statements if
infractions have accrued
over time.
A researcher whose
fraudulent clinical trial
saves lives is considered
more ethical than one
whose fraudulent trial
leads to deaths.
REMEDIES
Brainstorm unintended
consequences when
devising goals and
incentives. Consider
alternative goals that
may be more important to
reward.
Root out conflicts of
interest. Simply being
aware of them doesn’t
necessarily reduce
their negative effect on
decision-making.
When handing off or
outsourcing work, ask
whether the assignment
might invite unethical
behavior and take
ownership of the
implications.
Be alert for even trivial
ethical infractions
and address them
immediately. Investigate
whether a change in
behavior has occurred.
Examine both “good”
and “bad” decisions for
their ethical implications.
Reward solid decision
processes, not just good
outcomes.
Figure 3. The disastrous consequences of ill-conceived goals4
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5. ethikos January/February 2017 19
according to a recent survey of 217 large com-
panies spelled that for every billion dollars of
revenue, a company spends, on average, $1
million on compliance initiatives.5
However,
unless we watch out for our motives and drives
that can potentially blind people/leadership
to take the decision against the greater good,
there remains a challenge to foster a culture of
ethicality in the organization.
As Stan Mack of Demand Media says:
“Most people agree on some basic ethical
principles. For example, most believe lying,
stealingandviolentbehaviorarerarely,ifever,
excusable.Butcreatinganethicalworkplace
requires more than simply refraining from
widelyagreed-uponwrongs.Itentailschang-
ing thinking patterns to engender a change
from within. In other words, a workplace
that is truly ethical aligns itself with the
spirit, not just the letter, of the law. It does
the right thing because it is the right thing,
benefits aside. Managers can incorporate
ethics into the workplace by promoting and
modeling behaviors that promote respect,
honesty and integrity.”6
Balanced approach of feedback
and communication
A balanced approach focuses on a corrective
feedback that needs to be conducted in the
spirit of collaboration and education rather
than in terms of punishment or chastisement.
Collaboration and education allow for more
openness and less defensiveness when feedback
is provided. Immediate feedback is critical
to maximizing a fuller understating of the
problem behavior as well. When an element
of judgment has been removed from individ-
ual behavior and an atmosphere of open and
fearless communication has been facilitated,
it is easier to develop the employee morale
and ethical undertone in their behavior. Cor-
rective feedback is a notion that has been
borrowed from the introductory psychology.
It states that an organization offering timely
and thoughtful corrective feedback, such as
reinforcement for behavior that is desired and
corrective feedback for behavior that is not
desired, is critical to help create and sustain a
culture of ethical behavior and consideration.
More than ever, we live in a transparent
world. The perception plays a huge role in suc-
cess and sustainability of the company. The
decisions taken by the leadership, the ongoing
execution of the company’s visions and goals,
and the thoughtful action initiated by the orga-
nization all have consequences of far-reaching
magnitude that reverberate across the spectrum
due to the social media network we are exposed
to right now. Mere satisfaction of having a rule
book is not of much significance. It is import-
ant we exhibit them on an ongoing basis in our
spirits through leading with character. n
Jyoti Pandey is a Management Consulting professional
helping clients with Risk, Ethics & Compliance, and
Regulatory needs.
ENDNOTES
1 Lewis, 2011
2 Global Consumers Willing to Make Personal Sacrifices to Address Social and
Environmental Issues, 2015.
3 Tuttle, 2015.
4 5 Barriers to an Ethical Organization - Brazerman & Tenbrunsel 2011.
5 Research Report Independently Conducted by Ponemon Institute LLC January
2011 (http://www.tripwire.com/tripwire/assets/File/ponemon/True_Cost_of_
Compliance_Report.pdf , page 27).
6 Stan Mack, n.d.
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